Is This Enforceable?

[wdfifteen]

In a footnote to the usual privacy statement notice my bank sent me a notice saying that all disputes between us must be settled by an arbitrator and further:

"YOU UNDERSTAND AND AGREE THAT YOU AND HSA BANK ARE
WAIVING THE RIGHT TO A JURY TRIAL OR TRIAL BEFORE A JUDGE IN A PUBLIC COURT."

Can a bank, or any other business, wait for a year after you contract with them to arbitrarily and unilaterally insert changes in the fine print and enforce them? I can see maybe small changes, but can a bank actually enforce an after-the-fact demand that you give up your right to access the American legal system?

[KaptKaos]

Depends. Context is important.

Change banks?

[matt f]

The bank has more lawyers than the consumer and I'm sure they did their due diligence before enacting these changes.
Our option, as consumers, is to change banks.

[Por_sha911]

Check your landline company, smart phone carrier, Internet carrier, Cable company...
They have all done the same thing.

[sammyg2]

No. Not unless you agree to it ahead of time.

Lots O'companies try that and with many clients it works (and with employees also).

I worked for a company that tried that about 10 years ago.
They sent out a statement saying that all employees had to give up the right to sue and accept arbitration instead, sign here. Most employees signed.
I said nope. Ain't gonna sign.
They said ya got to.
I told em my lawyer said nope (bluff right back at em). They caved.


But like was previously mentioned, they can lawyer up a whole lot deeper than you can.
Never pick a fight you can't win, or one that's not worth winning.

[MRM]

Yes, it is probably enforcable, unless there's a quirk of local law that invalidates it. This situation is different than the one Sammy described. His situation was a unilateral change in an employment agreement that was not supported by additional consideration. The employer was asking (coercing) the emplyees to waive a right voluntarily and receive nothing in return.

In your case one party to an ongoing two-sided contract is saying that they don't want to continue the relationship any more unless you agree to change the controling agreement. You have the option of declining the change, in which case they'll cancel your account. The consideration given for the change in policy is each side agreeing to continue to do business with each other.

If you have a dispute with them that predates the change in policy, like an error in your account that happened last year, they probably can't enforce the arbitration clause retroactively. But if you stay with the bank they can probably enforce the arbitration clause on a going-forward basis.

Arbitration clauses on bank accounts and credit cards aren't entirely bad. They can reduce the cost of litigating a small claim to the point that the card/account holder can afford to fight the case and get a fair shake wth a neutral arbitrator. The question is who appoints and pays for the arbitrator and is he really neutral.

[GH85Carrera]

I had a credit card company send me a letter that they were going to start charging a yearly fee of $75 and charge 21% on open balances as soon as I agreed. I called them and told them I don't agree and to pound sand. They said they would terminate the card and all balances would be due immediately. I said fine. Then they checked and said you have a zero balance. I said I know, keep pounding sand and terminate the card.

I changed to a different card provider and I still keep a zero balance. They pay me a cash back at the end of the year and I never got anything from the other company.

[Rot 911]

MRM is correct. This is becoming standard language in many credit card contracts.

[sammyg2]

Originally Posted by Rot 911

MRM is correct. This is becoming standard language in many credit card contracts.

Seems like that guy's always right. How does he do that?
If we could just get him to keep hush hush on the trilateral commission ......

[john70t]

You: "This clause was not explicitly explained and signed. It is bait-switch and unenforceable".

Bank: "You did not immediately cancel when the info was provided. Implied concent applies."

[Christien]

Originally Posted by MRM

Arbitration clauses on bank accounts and credit cards aren't entirely bad. They can reduce the cost of litigating a small claim to the point that the card/account holder can afford to fight the case and get a fair shake wth a neutral arbitrator. The question is who appoints and pays for the arbitrator and is he really neutral.

I agree. Arbitration is often a much faster, more efficient way to an agreement than the court system. The key is to get an impartial arbitrator, and make sure you have a say in who is chosen. There might be terminology in there such as "a mutually-agreed-upon arbiter", which would mean you'd have the right to decline if you didn't like who they chose.

[wdfifteen]

Originally Posted by john70t

You: "This clause was not explicitly explained and signed. It is bait-switch and unenforceable".

Bank: "You did not immediately cancel when the info was provided. Implied concent applies."

Yeah, I thought the "implied consent" thing is what they would claim. Interesting. Implied consent to a footnote to another message. The footnote to the message did not state that continued use of the account implied consent, just stated the change in our "agreement." I guess I'm supposed to refer to the original contract for that language.
The root of this, obviously, is that banks are getting tired of all the class action suits against them over their abuse of their customers. Their response is not to start treating customers with respect, but to use the same underhanded tactics to immunize themselves from justice. I'm not sure why. BOA reaped $4.5 billion from their debit card scam and only had to pay $4.5 million in damages. A $4 billion profit from screwing their customers wasn't enough?

Honestly, I feel like a fish in a barrel, and insurance companies, financial service companies, and the governments are all shooting at me.

[wdfifteen]

Originally Posted by Christien

There might be terminology in there such as "a mutually-agreed-upon arbiter", which would mean you'd have the right to decline if you didn't like who they chose.

Actually, it specifies only that the arbiter is a member and holds to the standards of some association. I don't have the notice in front of me at the moment, but it says that if the standards of the arbiter don't meet their requirements, the bank's rules on arbitration prevail. There is definitely nothing about my right to decline the arbiter.

[wdfifteen]

Originally Posted by MRM

Arbitration clauses on bank accounts and credit cards aren't entirely bad. They can reduce the cost of litigating a small claim to the point that the card/account holder can afford to fight the case and get a fair shake wth a neutral arbitrator. The question is who appoints and pays for the arbitrator and is he really neutral.

In fact, the footnote explicitly states that matters brought before small claims courts are exempt. I'd be glad to post the whole footnote, but it is lengthy and the print is small.
It specifically mentions class action, and I believe this is a matter of banks trying immunize themselves against class action suits against the systematic screwing of their customers that banks have found so bothersome in the past 20 years. They want to make sure whatever scheme they come up with next will not be hampered by pesky claims of fraud and deceit.

[biosurfer1]

Originally Posted by wdfifteen

BOA reaped $4.5 billion from their debit card scam and only had to pay $4.5 million in damages. A $4 billion profit from screwing their customers wasn't enough?

Actually, that would be a $4.495 billion profit!

[boba]

It is my understanding that if you have the right to sue you cannot be compelled to give up that right. Even if that type of language is in a contract that you sign it is often unenforceable, but it will stop some folks, so it is worth a try.

This is not unlike the wavers everyone signs when entering a track event. The fact that you were informed that the activities are risky does not shield the operator totally. If they are negligent they can be held responsible even if you promised not to sue.

If you want to, just send them a letter saying you do not accept their terms and keep a copy with proof you mailed it. Then wait to see if they react or close your account.

[john70t]

Originally Posted by wdfifteen

There is definitely nothing about my right to decline the arbiter.

Then I'm guessing it could be argued that a significant change in policy represents an entirely new policy...one unsigned and unconsented.
(but I'm not a lawyer)

AFAIK: Arbitration is thought to be heavily biased towards the corporation, and statistically very few individual plaintiffs win.
A firm survives on repeat buisness, thus is predisposed towards whoever brings that buisness to them.

[greglepore]

Originally Posted by MRM

Yes, it is probably enforcable, unless there's a quirk of local law that invalidates it. This situation is different than the one Sammy described. His situation was a unilateral change in an employment agreement that was not supported by additional consideration. The employer was asking (coercing) the emplyees to waive a right voluntarily and receive nothing in return.

In your case one party to an ongoing two-sided contract is saying that they don't want to continue the relationship any more unless you agree to change the controling agreement. You have the option of declining the change, in which case they'll cancel your account. The consideration given for the change in policy is each side agreeing to continue to do business with each other.

If you have a dispute with them that predates the change in policy, like an error in your account that happened last year, they probably can't enforce the arbitration clause retroactively. But if you stay with the bank they can probably enforce the arbitration clause on a going-forward basis.

Arbitration clauses on bank accounts and credit cards aren't entirely bad. They can reduce the cost of litigating a small claim to the point that the card/account holder can afford to fight the case and get a fair shake wth a neutral arbitrator. The question is who appoints and pays for the arbitrator and is he really neutral.

Pretty good analysis-but in the context of a consumer contract for essential services-ie a bank-there may be a backlash with courts finding it unconcionable. These are routinely upheld in insurance contracts, however. There is a difference in that insurance contracts have to be approved by state regulators, cc and other bank contracts not always so.