National Arbitration Forum Misused?
Wednesday, August, 24, 2011
It has been reported that The National Arbitration Forum has been used by Bank of America Corporation to handle customer disputes regarding credit cards issued by the bank. According to sources, Dennis Herrera, the city attorney for San Francisco, California, Bank of America has agreed to pay $5 million dollars to settle a lawsuit that questioned this practice. Bank of America has denied any wrongdoing or liability, issuing a statement that merely said the settlement was reached in order to avoid the costs associated with defending against the lawsuit, as well as to protect investors against the financial risk of continuing with the lawsuit.
National Arbitration Forum Not Used by BoA since 2009
Bank of America's credit card agreements with consumers include a mandatory arbitration clause. In 2009, the bank stopped enforcing this clause. Since that time, no complaints have been sent to the National Arbitration Forum for resolution.
Still, previous use of the forum led to a lawsuit in 2008. Herrera specified that the $5 million settlement would take the form of a one-time payment and that funds would be supplied by Bank of America's FIA Card Services North America unit.
The settlement was more than financial in nature, however. According to Herrera, consumer protection was also achieved in the settlement language, which eliminates mandatory arbitration clauses as well as class action waivers in some of its credit card agreements. Presumably, this will lead to less credit arbitration between BoA and its customers.