Major banks are adding to the fine print of their already-lengthy disclaimers. In addition to ATM, overdraft, and bounced-check fees, banks are adding text that prevents customers from suing the bank individually or as part of a class-action lawsuit, according to a recent study by The Pew Charitable Trusts. In 2014, 70 percent of banks included a mandatory binding arbitration clause in their checking account disclaimers, up from 58 percent the previous year. The clause generally requires all disputes a customer has with the bank to be resolved via arbitration, not in court in front of a judge and jury.

Consumer advocacy groups say that these clauses are unfair to consumers because they require the consumers to waive their legal rights. They point out that arbitrators can be biased in favor of the banks because banks give them work. Decisions made in arbitration are difficult to overturn, and can often deny consumers their right to a jury trial, which might be more sympathetic than an arbitrator.

Alan S. Kaplinsky, a partner at Ballard Spahr, says avoiding a class-action suit may be in the best interest of the consumer. He notes that lawsuits are often time consuming, but rarely successful for consumers. Arbitration, he says, is “a win-win: companies like it because it lowers costs and consumers find it less intimidating.”

Related Practice

Consumer Financial Services