Congress Has Made It Harder to Sue Bad Banks

Congress Has Made It Harder to Sue Bad Banks

When Wells Fargo employees met sales goals by creating 3.5 million fake bank and credit card accounts using real customer information, the affected customers were prevented from suing because some fine print in their customer agreements specified that disputes must be settled in arbitration. And when Equifax experienced a massive breach of consumer data, it offered consumers a year of free credit protection -- if they agreed to a contract that included a similar arbitration clause.

Big businesses, including banks and financial institutions, regularly put forced-arbitration clauses in their standard consumer contracts. These are contracts we all have to sign to take part in virtually any transaction, from opening a bank account to getting a cellphone.

Arbitration clauses not only bar consumers from going to court with grievances, but generally prevent class-action lawsuits as well -- which is a big problem, because the limitations of arbitration may leave consumers with no remedies.

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Source: Fool.com