Last month, twenty-five public interest organizations condemned Bank of America’s decision to insert a forced arbitration clause in the fine print of its Online Banking Service Agreement. 

The groups said that forced arbitration blocks customers’ access to the court system and eliminates their right to a jury trial when they are harmed, instead forcing them into biased, closed-door proceedings where consumers rarely win. It also prevents people from joining together in class action lawsuits to fight back against systemic harms.

“Bank of America should immediately remove the arbitration clause from any of its contracts with consumers,” said Patrick Crotty, senior attorney at the National Consumer Law Center. “Customers should act swiftly to opt-out of the arbitration clause, and if the bank fails to walk back this decision, customers should consider transferring to a bank that doesn’t use fine print to take away their rights to a judge and jury.”

Bank of America’s agreement gives customers just 60 days to opt-out after they receive notice. 

For many Bank of America customers this clock has already started ticking, but they do not know because the opt-out provision is buried deep within arcane contract language. 

In 2009, Bank of America, along with Capital One, JPMorgan Chase, Discover, and HSBC, were defendants in an antitrust lawsuit in which credit card borrowers alleged that these banks, and other large banks, colluded to implement arbitration provisions in their credit card agreements to prevent their customers from enforcing their rights under state and federal law in individual and class action cases. 

As a result, Bank of America stopped using its consumer contracts to force customers into binding arbitration. And for almost 17 years, Bank of America customers retained the ability to hold the bank accountable in the public court system. 

But the new forced arbitration clause also prohibits customers from joining their claims together in class actions to seek justice when systemic, widespread harm occurs. This is particularly harmful to consumers with small-dollar claims, which they couldn’t afford to pursue on their own. 

Unlike individuals, large and powerful companies like Bank of America can become repeat customers of arbitration companies, incentivizing arbitrators to decide disputes against consumers and in the corporations’ favor. 

Because arbitration proceedings are generally private, and decisions often remain hidden, this imbalance goes unchecked. Forced arbitration hides corporate wrongdoing from public view and shields corporations from large-scale public accountability.

“The forced consumer arbitration system is rigged,” said Crotty. “Bank of America must remove the forced arbitration clauses from all customer agreements to ensure fairness and legal rights for its tens of millions of customers, just as it had for nearly two decades.”

Tell us a bit about the history of arbitration agreements?

“Arbitration agreements have been around for a long time,” Crotty told Corporate Crime Reporter in an interview last month. “There was a perception that courts were hostile toward enforcing arbitration agreements. The Supreme Court has said that the Federal Arbitration Act encourages arbitration. The idea is that arbitration clauses should be on the same footing as any other contract.” 

“But they were not very common in the consumer context until the early 2000s when they started to be coupled with class action waivers. They have come to be a method through which corporations can essentially quash consumers’ ability to join together to bring larger lawsuits over harms that individually would not be in their economic interests to litigate.”

“In 2011, the Supreme Court, in a case titled ATT v. Concepcion, found that these class action waivers were Constitutional. Since then, they have really proliferated. Now, in certain areas, arbitration clauses are in every type of consumer contract.” 

“The Consumer Financial Protection Bureau did a study in 2015 looking at arbitration clauses in various consumer financial products. And they found that between 85 percent and 100 percent of the product areas studied had arbitration clauses with class action waivers in them.”

“So the class action waiver coupled with the arbitration agreement has become ubiquitous across the financial sector, but also in most other consumer transactions as well. If you sign up for a streaming service, if you purchase cable or telephone or internet service, you are almost certainly waiving your right to bring a lawsuit in court and have your dispute determined by a judge and jury.” 

“Now, as a condition of doing business with any of those companies providing those services, you have to agree to use their arbitration courts.”

Those arbitration forums are dominated by corporate lawyers and judges?

“There are a couple of different arbitration forums. There’s one called JAMS – Judicial Arbitration and Mediation Services. They are largely retired judges. They are not the most common arbitration forum. The most common arbitration forum is the American Arbitration Association (AAA). And mainly corporate defense counsel serve as arbitrators in that forum.

In a recent press release, NCLC reports this:

  “In 2009, Bank of America, along with Capital One, JPMorgan Chase, Discover, and HSBC were defendants in an antitrust lawsuit in which credit card borrowers alleged that these banks, and other large banks, colluded to implement arbitration provisions in their credit card agreements to prevent their customers from enforcing their rights under state and federal law in individual and class action cases. As a result, Bank of America stopped using its consumer contracts to force customers into binding arbitration. And for almost 17 years, Bank of America customers retained the ability to hold the bank accountable in the public court system.”

What has changed since then?

“Bank of America settled out relatively early – I think in 2009. But the case dragged on until 2014. And in the intervening years, essentially everyone added class action waivers and forced arbitration clauses to their contracts.” 

“The court noted in 2014 that the plaintiffs failed to establish their antitrust conspiracy as a cause of action. And given the ubiquity of consumer forced arbitration agreements, Bank of America just thought they could get away with putting them back in.” 

“There is some empirical research showing that consumers really don’t understand forced arbitration clauses and are largely unaware of them. So Bank of America just decided that enough time had passed and any reputational damage they might suffer from reintroducing forced arbitration back into their contracts would be offset by the ability to prevent class action lawsuits.”

“So there were no forced arbitration clauses in Bank of America contracts from 2009 to this year – seventeen years.” 

How does a consumer opt out?

“You have sixty days from the time you receive your notice from the bank that the terms have changed. Most consumers have received that notice. Sixty days out would be sometime later this month.”

“Bank of America provided a hyperlink that you can click and then sign in to your account. Then you click a button at the bottom of the page. And you get a message confirming you have opted out.” 

“But in some ways, it’s academic. Most likely, Bank of America will make further changes to their customer agreements. And unless you opt out after they make those further changes, you will likely still be subject to forced arbitration. Also, the language of their contract is somewhat ambiguous. It says that anytime you use the online banking services, the use is governed by the online banking contract. And that contract contains that forced arbitration agreement.”

“So, it’s not entirely clear that even if you opt out, and you then continue to use the online banking, they won’t argue that your use is still governed by the online contract. So maybe in addition to opting out, you need to not use that online banking service. Other companies have made similar arguments when trying to enforce forced arbitration provisions.”

What are the outcomes of consumer complaints in courts compared to those in forced arbitration?

“The gist of it is that consumers do not do nearly as well in arbitration as they do in court. A study of cases filed with the American Arbitration Association found that consumers won only 35 percent of cases filed with AAA. Even when they did prevail, their recoveries were limited on average to just 19 percent of their monetary demand.”

Consumer law enforcement seems to be historically weak. Would you agree?

“Unfortunately I would have to agree. The CFPB has been gutted. That is a major blow to consumer protection enforcement in general. The Federal Trade Commission hasn’t been stripped for parts the same way the CFPB has, but the FTC has been bringing fewer cases and has dropped some enforcement actions that don’t align with administration priorities.” 

“The state Attorneys General have picked up the slack in some areas.” 

“On the private side, to bring a consumer protection action, you will need a common law claim or a private attorney general cause of action. Those kinds of rights to sue have been unpopular with businesses. Right now, we are in a new gilded age where laissez faire is the prevailing perspective. Businesses don’t want regulation including the ability of consumers to file claims against them. And they have found a receptive audience in Congress and the courts. And as a result, consumers’ rights to sue have been scaled back. It is now difficult to sue in the area of illegal or unwanted communications – like robocalls for example.”

“Consumer protection is by no means dead, but the pendulum has swung in a way that has made it more difficult for consumers to take action when they have been harmed by corporate practices.”

[For the complete q/a format Interview with Patrick Crotty, 40 Corporate Crime Reporter 20(13), May 25, 2026, print edition only.]