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In the sector’s latest shift away from debatable forced settlement clauses, Bank of America related Thu. that it will not need Mastercard, deposit account and vehicle loan purchasers to sign away their right to sue. The change comes as imperative settlement clauses found in credit card, phone and, increasingly, job contracts drawn criticism from regulators and Congress. Last month, Minnesota lawyer General Lori Swanson sued a major dispute-resolution firm, State settlement Forum, charging that it hid its ties to the debt-collection industry.

Since then, a rising number of dispute-resolution firms and Visa card corporations have backed away from settlement. Chase last month stated that it would no longer file new settlement claims on consumer card disputes. BofA’s move is wider as it will not need imperative settlement for banking and loan customers. That suggests clients can now sue the bank instead of having the argument handled by a previous judge or legal expert behind closed doors.

“This is a significant victory for consumers,” claims Ed Mierzwinski, consumer program director at the US Public Interest Research Group. “If banks know they will not be protected by settlement, it’ll lead to fairer ( product ) terms. Some banks may review their use of settlement to struggle against their peers, claims Scott Talbott, senior vice chairman of the Finance Services Roundtable, which represents large banks. Voters Bank now explains it’s reviewing imperative arbitration clauses in Mastercard contracts.

In the meantime , Amex is “reassessing” its options related to settlement forums, announces spokesman Joanna Lambert.

While the industry still believes settlement is a fair process, Talbott claims, it has unfairly “become a lightning rod” for feedback. BofA explains it made a decision to ax settlement in part because of consumer grumbles. Even though it no longer needs settlement for new disputes, it’ll establish whether individual existing disputes can go to law. Eric Gertz, 39, who has a settlement hearing prepared in Sep against BofA related to $18,000 in disputed charges, claims it might be “unfair” if he could not sue the bank since other customers now can. Michael LeRoy, a law lecturer at the University of Illinois, announces while he understands consumers’ relief to have an option besides arbitration, they shouldn’t expect the “delayed and over-taxed” court system to be a cure-all.