Many Newark residents may have been surprised recently when they received a letter in the mail telling them that if they have a dispute with Wells Fargo, they are required to participate in binding arbitration with the bank, and are not allowed to have a jury trial or a trial by a judge. The bank, which is also not allowing checking and savings customers to be a part of class action suits, is the second largest holder of deposits in New Jersey.
While the letters may have shocked some Wells Fargo clients, the bank has actually required arbitration for checking and savings customers for about 15 years, the letters were sent out only to announce a small change in its arbitration policy. Five of seven large banks in the U.S. have mandatory arbitration requirements, according to a survey of the Public Citizen.
According to a news report, this sentence is all that has been added to the policy: “The arbitrator shall decide any dispute regarding the enforceability of this arbitration agreement.”
Arbitration is in fact an inexpensive way to settle disputes for both parties. It is often also much quicker than going through the court system. Some consumer groups however argue that mandated arbitration is not fair because the companies choose the organizations that assign the arbitrators.
Another criticism of mandated arbitration is that the main goal of it is to terminate the possibility of a class action suit.
While that may be true for large corporations which require arbitration, arbitration, mediation and dispute resolution services can still be a very satisfactory way to resolve a dispute for those involved in business or civil litigation.
Because of this, it is often wise for those involved with such litigation to consider arbitration as an option in most cases. Much time and money can be saved by negotiation, mediation and arbitration, however sometimes when a resolution cannot be agreed upon, it is necessary to take the dispute into litigation
Source: NorthJersey.com, “Wells Fargo tweaks its mandatory arbitration agreement,” Richard Newman, Feb. 8, 2012