San Francisco's city attorney said Bank of America Corp. agreed to a $5 million settlement of a suit over its use of the National Arbitration Forum to handle credit-card disputes, according to Dow Jones.
In a statement, Bank of America said it and the city agreed to settle to avoid the costs and uncertainty of further legal action. It denied any liability or wrongdoing.
According to City Attorney Dennis Herrera, Bank of America's FIA Card Services NA unit would make a one-time $5 million settlement payment to settle the litigation begun in 2008.
Arbitration has been a hot topic for issuers in recent years following a 2005 class-action lawsuit accusing Bank of America Corp., JPMorgan Chase & Co., Capital One Financial Corp., Citigroup Inc., Discover Financial Services and others of antitrust violations by conspiring to require cardholders to resolve disputes through arbitration.
Four banks, including BofA, Chase, Cap One and HSBC Holdings PLC in 2010 reached settlements in the case and agreed to scrap arbitration clauses in their cardholder agreements.
Consumer advocates are united in their opposition to bans on class-action lawsuits. The Pew Health Group’s Safe Credit Cards Project in July 2009 specifically called for issuers to remove arbitration clauses from cardholder agreements.
