Large banks removing your right to jury trial

In this area of Southeastern Pennsylvania we are well accustomed to our smaller banks being eaten up by ever larger banks and the transitions these moves involve. One of the transitions for which we might not be prepared is that 9 of 10 larger banks have been found in a recent study by Pew Charitable Trusts to have included waivers of jury trial in their agreements.

(See “9-in-10 Big Banks Strip Customers Of Their Right to Jury Trial,” https://consumerist.com/2016/08-17/9-in-10-bigbanks-strip-customers-of-theirright-to-jury-trial/.)

What this means is that, if you have a claim against one of these banks, you would no longer have the right to be heard by a jury of your peers. It gets worse. According to this source, 70 percent of these larger banks have also instituted forced arbitration clauses. It is well known that in many industries, binding arbitration is stacked against the consumer.

This is true for several reasons. First the industry has greater familiarity with individ-

uals who are likely to be chosen as arbitrators. The individual is in a David vs. Goliath situation except that Goliath is likely to be judged by someone coming from the same team or one close by.

Arbitration is not likely to receive the attention that an open court hearing would have. The proceedings are likely behind closed doors. The parties may enter into confidentiality agreements.

Finally, as Consumerist indicated, arbitration awards tend to be lower than court awards. Consumers may have difficulty finding and paying for qualified counsel to represent them since the big pockets of the industry have more money and time available to them.

All of these concerns relate to arbitration. However, another and possibly more disturbing factor is that some companies have begun writing into their agreements a stipulation that consumers give up their ability to participate in a class action. Where a group of consumers might bond to challenge an action by a large bank, now, for those banks affected, each person must bring the action on his own. While class actions typically result only in small settlements for the individual consumer, they might at least correct the wrong. Most consumers would not bring a claim on their own unless they are seriously impacted.

In recent days we became aware of some of the kinds of problems consumers might encounter with large banks when it was publicly disclosed that Wells Fargo, one of the largest, agreed to pay a $185 million fine for actions described in Forbes as “Wells Fargo employees (pumping) up their paychecks by opening millions of false accounts in real customer’s names.” (http://www.forbes.com.)

As a footnote, legal action might not be over regarding that scandal yet.

In a case decided in 2011 that seems to have received little attention at the time and probably should be reexamined if we have a new Supreme Court after the November election, AT&T Mobility LLC v. Concepcion, the U.S. Supreme Court decided against the consumer on issues regarding arbitration. Although it was not a bank case, it is affecting consumer contracts with major corporations across the board. Vincent and Liza Concepcion sued AT&T Mobility over deceptive advertising in their wireless phone plan. Where California law would have allowed a class action, the Supreme Court found that the Federal Arbitration Act preempted California state law and found in favor of AT&T.

Here is the difference between these types of agreements that deny access to the Court and those commercial agreements to which we have become almost uniformly accustomed.

By now we have come to realize that companies with whom we do business can modify some terms of the agreements. They change service fees, regulatory provisions and service provisions on a regular basis and send a notice, sometimes with the next bill. You can accept or you might move on to another provider.

When it comes to access to the Courts, imagine that every company with which you deal has the right to take away your ability to act when they fail to comply with their own guidelines or when they fail to follow the law and also suppose other large entities do the same. Can some of the larger banks with which we deal, or other providers, restrict access to the Courts to the point that you can no longer rely on information provided or consumer protection that you thought you had. How can you protect yourself? Stay tuned.

For more, listen on Wednesdays at 4 p.m. to radio WCHE 1520, “50+ Planning Ahead,” with Janet Colliton, Colliton Elder Law Associates, and Phil McFadden, Home Instead Senior Care.