Scranton Bank Says Arbitration is Rarely Necessary
As attitudes toward mandatory arbitration change, one bank in Scranton points out there are few worries within the industry. According to a new federal rule, bank customers have more access to class action lawsuits, something that was not always an option because of the arbitration clauses customers were required to sign. Despite the shift in thinking, small community banks are not concerned because they say disputes rarely escalate to that level.
These smaller banks have the ability to work closely with clients and take a more “folksy” approach to prevent lawsuits. Instead of fighting back against unhappy customers with legal limitations and lawsuits of their own, they simply work with customers to resolve the problems that arise. Their goal is not to hide tricks in the small print, but to prevent problems from ever occurring.
The majority of bank customers do not bother to read the terms of service agreements they are given when they open a new account at a bank and most fail to realize they are giving up their right to sue the bank by opening an account – or in some cases simply visiting the website of the bank. The latest ruling prohibits mandatory arbitration clauses that make class actions suits not an option. Many of the larger financial institutions are concerned this could have a negative impact on business. These larger banks criticized the move and believe it will cost billions of dollars in the long run, but local community banks aren’t worried. Some even point out the law doesn’t really affect smaller banks, and is intended to keep larger banks under control.