CFPB To Consider Rules That Would Revoke Banks’ “License To Steal”
by Chris Morran, Consumerist
For those unfamiliar with arbitration clauses, here’s how it works: Somewhere in the contract or user agreement with a company (it’s not just banks; cable companies, telecom providers, tech manufacturers, and others are increasingly doing this), you might find a paragraph or two, usually under the heading of “dispute resolution.”
You can’t change these terms and rarely have the choice to opt out, meaning you have no choice but to accept the full contract or use another product.
But if you ever have a legal dispute with that company, you’ll find that these few sentences prevent you from going to court. Instead, you’re forced to enter into a process of mandatory binding arbitration that heavily favors the business. They understand the process, know the arbitrators (sometimes a little too well), and any damages that can be awarded are very limited so the customer is unlikely to find anyone willing to represent them in their case.