Bank of America has recently added an arbitration clause back into its consumer contracts for its online banking agreements, 17 years after it dropped those clauses.
Public interest and consumer organizations are urging Bank of America it to reverse course and remove the arbitration clause.
The bank’s Online Banking Services Agreement, which went into effect May 18, removes its customers’ right to have any dispute heard in court, prohibits customers from joining their claims together in class actions, and mandates restrictive procedures for arbitration proceedings involving multiple claimants with similar claims, also known as mass arbitration.
“Particularly at a time when your customers are facing rising costs and federal regulators have abandoned their role in holding corporations accountable, we are deeply disappointed that the bank is once again moving to subject its customers to a forced arbitration provision,” the letter said.
In 2009, the bank stopped using its consumer contracts to force customers into private arbitration before any dispute arose. Bank of America and other big banks entered into a settlement in 2010 where they agreed to stop enforcing their forced arbitration clauses and class action bans against its customers, and agreed to remove the provisions from their credit card terms for 3.5 years.
A Bank of America official said in a 2017 letter to Sen. Elizabeth Warren that its 2009 removal of arbitration clauses from its consumer agreements was the “right business practice to maintain relationships with its clients and customers.”
“The forced predispute consumer arbitration system is rigged,” the groups said in their letter. “Large and powerful companies like banks become ‘repeat players’ of arbitration firms, which then have an incentive to decide disputes against consumers and in the bank’s favor.”
The groups’ letter also criticized the limited time, 60 days from the notice of the change, that customers have to opt out of the arbitration clause.
“[T]he clock has already started ticking for tens of millions of your customers who likely are unaware of this material change to their legal rights,” the letter said. “Most customers will never notice the opt out provision or be sufficiently put on-notice of the limited window of opportunity to opt-out of the forced arbitration clause and the important reasons to take advantage of it.”
The organizations recommend that all Bank of America customers opt out of the arbitration clause. Customers can opt out at www.bankofamerica.com/arbitration-optout or call the bank at 800-283-8875. The information is also available in the new agreement.
“As working families struggle with rising prices and economic uncertainty, Bank of America is adding to that burden by forcing its customers to give up their legal rights,” Christine Hines, senior policy director for the National Association of Consumer Advocates, a consumer group, said in a statement. “We urge the bank to reverse this terrible decision so that its customers can continue to choose how to resolve disputes after they arise.”
Among the other groups signing the letter are Public Citizen, Alliance for Justice, Consumer Action, Consumer Federation of America, National Association of Consumer Advocates, National Consumers League, New Economy Project, American Economic Liberties Project, and Public Justice.
