Banks Seek to Halt Class Action Suits

In an effort to halt class-action suits, Fleet Boston Financial Corp., as well as Citigroup Inc. and MBNA Corp. are modifying their cardholder agreements to limit or prohibit class- action suits against the bank. In his article in the Wall Street Journal, Jess Bravin reports that these, and other banks as well, require that cardholders submit their claims against the bank to arbitration. In such instances, the consumer and the bank share the costs of arbitration. Alternatively, the consumer can press his claim in the small claims court. A contentious issue raised by the new provisions is that they are retroactive. If these provisions hold up to legal scrutiny, they could effectively bar class action suits against the banks. As might be expected, legal opinions vary widely about the legality of these provisions.