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No Ripoff Clause

Banking

Banking

Banks that use forced arbitration for their credit cards require customers to sign away their right to go to court when opening a checking or savings account or getting a debit card. This means that, like credit cards, any disputes between customers and banks over bank account fees, identity theft, or other charges will be decided by a company chosen by the bank, rather than an impartial judge. In a 2008 survey, Public Citizen confirmed that 9 out of 10 studied banks require arbitration to open an account, including Bank of America, JP Morgan Chase, Wachovia, Wells Fargo CitiGroup, SunTrust, U.S. Bancorp, and BB&T.

Story

Rosario Sobremonte & Amparo Esperidion, California

Rosario and her 84-year older mother, Amparo, had two Bank of America accounts. When they opened their accounts, their agreements did not contain an arbitration clause. However, several years later, the bank allegedly mailed a 3″ x 6″ fine print notice in customers’ monthly statements modifying the account agreements to include an arbitration clause. The customers in this case did not recall receiving that notice. In September 1994, the bank debited Sobremonte’s and Esperidion’s accounts without notice because a third account that Sobremonte had with another person was overdrawn. In October 1994, Sobremonte wrote to the bank demanding return of the funds to the accounts that she had with her mother. The bank ignored the letter.

In December, the two customers hired a lawyer, who wrote another letter to the bank demanding the funds. The bank took three months before responding with a letter denying her request. Their lawyer filed suit against the bank in May 1995. In response, the bank argued that the claim had to be resolved in arbitration. However, the bank did nothing more to request arbitration of the dispute until 10 months later. The California Court of Appeals found that by Bank of America had prejudiced Ms. Sobremonte by delaying its request to arbitrate, and had therefore lost its right to arbitration.

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