WASHINGTON (SFGate.com) — Arbitration clauses in the fine print of credit card and checking account agreements harm consumers by limiting the compensation they can receive in disputes with financial firms, the nation’s top consumer financial guardian said.
More than 75 percent of consumers didn’t know if they were subject to the clauses, many of which limit the ability to go to court to settle disputes, according to a study released Tuesday by the Consumer Financial Protection Bureau.
Fewer than 7 percent of those covered by arbitration provisions knew that the terms restricted the ability to sue or participate in class-action cases, the study found.
Those class-action suits often produce larger payments to consumers than arbitration proceedings, the consumer bureau said.
The provisions allow either the financial firm or the consumer to require that any dispute be settled by a private arbitrator instead of in court.