Monday, July 8, 2019
In a letter to JPMorgan Chase & Co.’s CEO, Presidential hopeful Elizabeth Warren asked the bank to stop “exploiting its customers” by using what the bank considers the “standard practice” of asking its customers to arbitrate potential claims against it. Chase’s customers can, however, opt out of mandatory arbitration by mailing written rejection notices by Aug. 9, 2019.
Arbitration is, of course, easier for banks and other defendants than having to face a multitude of individual lawsuits. The concern for smaller plaintiff such as private bank customers is that arbitration is not as neutral as a lawsuit as arbitrators are hired privately by, for example, the banks. Arbitrators may thus be unduly biased in favor of the banks and more business savvy than bank customers, who might obtain greater protections from hiring an attorney and going to court. The exploitation part comes in when defendants arguably seek to "sneak" arbitration onto unsuspecting, unsavvy bank customers who are not aware of all the pros and cons of various types of dispute resolution.