Recent Pew Report Examines Forced Arbitration in Checking Accounts
Pew Charitable Trusts recently released its fifth in a series of reports reviewing checking account terms and conditions. It criticized overdraft practices that result in excessive fees and the use of forced arbitration in the fine print of customer agreements. Pew defined three best practices for financial institutions that provide checking accounts:
• Provide checking accountholders with clear and concise disclosure about fees and terms.
• Reduce the incidence of overdrafts and eliminate practices that maximize overdraft fees.
• Allow consumers to choose the method by which they resolve a problem with their bank, rather than requiring pre-dispute binding arbitration.”
In its report, Pew issues recommendations to the Consumer Financial Protection Bureau including a rule to “Prohibit, in checking account agreements, pre-dispute mandatory binding arbitration clauses, which keep accountholders from accessing courts to challenge unfair and deceptive practices or other legal violations.” Read the report.