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Banks Deny Clients Their Day In Court

Wednesday, August 3, 2011 - 12:58 PM
From SmartMoney.com
Some small and regional U.S. banks are prohibiting unhappy customers from taking their complaints to court or joining class-action lawsuits, instead requiring them to resolve disputes through arbitration.

The banks are emboldened by a U.S. Supreme Court ruling in April that said state laws can't supersede private contracts that require customers to present their complaints individually to an arbitrator.

The decision attracted attention from financial firms and other companies like cellphone providers that embrace mandatory third-party arbitration for customer gripes, saying it helps them resolve disputes fairly for customers and more cleanly than getting tied up in lengthy and costly court cases.

Consumer advocates say they don't like arbitration because it restricts the ways in which....

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