August 14, 2009

Bank of America Corp. said that as of Thursday it will stop requiring that disputes with its credit card holders and banking and lending customers be settled by binding arbitration, opening the door for class-action and other lawsuits to push up the bank's legal costs.Many consumers are unaware that card agreements typically include a clause that waives a card holder's right to sue.

Lenders instead use arbitration to go after delinquent accounts and consumers can employ arbitrators to fight disputes with their banks.Banks have said arbitration is less costly for everyone than lawsuits, but consumer groups have criticized the practice as tilted in favor of banks.