B of A does away with arbitration rule
TEXT OF STORY
KAI RYSSDAL: On a Friday approaching the end of summer, the economic news looks something like this. The president’s out west talking health care. The stock market is worried consumers still don’t have any confidence. And Bank of America is trying to change its image. A change to the fine print, to be sure, but one that could wind up making a very big difference.
When you get into a disagreement with your credit card company, like Bank of America, you usually head straight into mandatory arbitration. You don’t have a choice. You sign away your right to sue when you sign up for the card. At least, that’s was the way things used to be. Bank of America has decided it’s going to drop that requirement.
And Marketplace’s Jeremy Hobson reports the bank figures it’ll get at least as much benefit as the customers will.
Jeremy Hobson: Arbitration has gotten a particularly bad name recently. The Minnesota Attorney General successfully forced two of the nation’s largest arbitration firms out of the business after contending they weren’t disclosing financial ties to the companies fighting consumers in arbitration cases.
Celent banking analyst Bart Narter says arbitration is becoming a PR headache for banks.
Bart Narter: Bank of America is looking ahead and saying, “This is going to generate a lot of bad publicity for us and let’s just head this one off at the pass and get ahead of any potential regulation on this.”
For the record, a Bank of America spokesperson says the bank still thinks arbitration is fair; it’s responding to customers who don’t feel the same way.
But Narter says B of A also has its eye on Washington.
Narter: Bank of America has taken one reason to create new legislation away.
And Narter says the other big credit card issuers — Citibank, Chase, American Express and Capital One — may follow the lead. That would leave consumers with the option to sue over disputes. And that makes Susan Weinstock at the Consumer Federation of America very happy.
Susan Weinstock: They’ll be able to go to court if that’s what they choose to do, but they’re not going to be bound by this arbitration that often is performed by people who have a conflict of interest, which they lose most of the time.
Ninety-four percent of the time, according to a recent study. The arbitration industry says one reason that number’s so high is because many consumers don’t bother to defend themselves in the arbitration process.
In New York, I’m Jeremy Hobson for Marketplace.
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