A 2016 study by The Pew Charitable Trusts notes that consumer disputes with banks over fees and policies are on the rise. Of particular concern are mandatory arbitration clauses found in 90% of bank account agreements. These forced arbitration provisions steer consumers to third-party decision-makers whose decisions are usually binding, giving the consumer limited or no opportunity to appeal. Such provisions also prohibit consumer bank customers from seeking any remedy in an impartial court of law.
Pew research found that nearly three-quarters of bank contracts include forced arbitration clauses, provisions that also ban consumers from employing class action lawsuits to protect their rights. In fact, more than 90% of the major U.S. banks include at least one contract provision restricting consumers’ dispute resolution options, including any right to a jury trial.
According to a Pew article “Consumers Want the Right to Resolve Bank Disputes in Court,” the organization’s research “clearly demonstrates this divide between bank policies and customer preferences on dispute resolution limitations. The public wants access to the justice system, including the right to join and pursue a class action, while banks continue to restrict such access.” (Emphasis added.)
An overwhelming 95% of consumers want the option of being able to dispute their banks in a real court. And nearly 9 in 10 consumers want the option of participating in a class action lawsuit.
As major banks continue to limit consumers’ access to true legal action, the forced inclusion of mandatory agreements restricting consumers’ options in any bank disputes expands as well, “leaving many [consumers] with limited recourse to address low-dollar but systemic issues.” Since the year 2013, the percentage of banks that waive jury trials has increased from 79% to 93%. Indeed, 91% of the 44 banks studied by Pew include jury trial waivers in their account agreements.
The findings from the Pew study display the extreme deprivation of consumers’ most basic rights under mandatory arbitration provisions. And for most consumers, at the time they open a bank account, they have no real sense of how drastically they are signing away their most fundamental consumer rights.
About Lieff Cabraser and Consumer Protection
False advertising, bait and switch marketing, phony disclosure of manipulative bookkeeping devices, unconscionable pricing, and charging for services never provided are some of the many unfair and deceptive practices rogue corporations use to defraud consumers.
Lieff Cabraser advises consumers as well as businesses whether and how to pursue legal action to halt and obtain compensation for the deceptive practices of large corporations. With a blend of courage, superior legal skills, and high principles, we protect our clients’ interests and help them achieve their goals by winning highly-complex consumer protection lawsuits against those that have defrauded consumers.
We have successfully prosecuted scores of consumer class action lawsuits against many of the largest U.S. banks, financial service companies, and corporations. Working with co-counsel, we have achieved judgments and settlements in excess of $3 billion for consumers in these cases, including over $200 million in lawsuits over abusive and harassing robocalls and text messages brought under the Federal Telephone Consumer Protection Act.