Legal News

Bank of America Says ?No Mas? To Arbitration

By Dionne Searcey

This just in: another credit card company has decided to punt on arbitration. Bank of America Corp. today said it is dropping a rule that forces customers into arbitration if they have a dispute about their credit-card or certain other consumer-related accounts.

The WSJ's Robin Sidel says in her story the move, which comes amid a shakeout in the use of mandatory arbitration by big U.S. banks, means consumers will now be permitted to file lawsuits against Bank of America to resolve such disputes. Last month, two major organizations that preside over mandatory arbitrations said that they were pulling back from the business of using the process for collection matters.

Bank of America, based in Charlotte, N.C., is the first major bank to announce that it is withdrawing from all mandatory arbitrations in consumer-related businesses. Other banks previously have said they are studying their policies.

"We think arbitration is a very fair way to resolve the issue. A lot of our customers did not feel the same way, so we decided to make a change," said a Bank of America spokeswoman.

In July, JPMorgan Chase, one of the nation's largest credit-card issuers, announced it would no longer submit disputes to arbitration and was reevaluating the inclusion of arbitration provisions in its consumer contracts.

All the news comes in the wake of congressional testimony on arbitration as well as a Minnesota Attorney General's agreement in which the National Arbitration Forum decided to stop hearing consumer arbitration cases.

Full post as published by Law Blog - WSJ.com on August 13, 2009 (boomark / email).