Cap One, Bank of America Drop Mandatory Arbitration Clauses
Earlier this year, two large arbitration firms announced they would no longer be handling credit card collection disputes. Now comes word that, as a result of a huge class action lawsuit against the major banks, many of them are starting to drop the language in their contracts that requires consumers to engage in binding arbitration rather than taking their case to the courts. Earlier this week, B of A announced it would drop these requirements for consumer and small business agreements for at least three and a half years. On Thursday, Capital One became the latest bank to agree to drop the clause, as part of a settlement over the lawsuit. B of A and Cap One join JPMorgan Chase, which had previously reached a similar agreement in November.
These settlements are hailed as a victory for credit card users, as many consumer advocates have viewed the arbitration process as being unfairly biased towards the credit card companies.