Lucas,
Charles Schwab & Co., Inc. — a well-known investment advisor holding more than $2 trillion in assets for millions of investors — is trying to eviscerate its customers' rights.
In the fine print of Schwab's terms of service, there's a forced arbitration clause and a ban on consumers joining together in class actions — a serious blow for small investors.
Stand up to Chuck: Tell Charles Schwab & Co., Inc. to stop steamrolling its customers' rights.
Corporations are increasingly using these terms to deny consumers their rights. The forced arbitration clause means that if you ever have a dispute with the company, you can't go to a public court. You'll have to go to a private, secretive tribunal chosen by Charles Schwab.
Class-action bans prevent you from banding together with other customers to hold these firms accountable for deceptive, fraudulent and illegal practices. So if Schwab misled investors and caused them to lose their hard-earned savings, only those few with the time and resources to seek justice individually – in costly and secret arbitration that is stacked against them — stand a chance to recover their losses. Meanwhile, Schwab can escape real accountability for potential bad actions.
Schwab's decision is particularly egregious because it is the first of the brokerage firms to prohibit investors from participating in class actions. Now that Schwab has done it, others will likely follow.
Here's why:
The Financial Industry Regulatory Authority (FINRA), a banking industry self-regulatory body, already has rules to prevent brokerage firms like Schwab from banning class actions.
By inserting a class-action ban into its terms, Schwab violated those rules. FINRA filed a complaint against Schwab to order it to remove the class-action ban.
You read that right. Even a corporate self-regulatory body that's packed with bankers understands that it's wrong to deny consumers' rights.
Unfortunately, FINRA lost the dispute against Schwab, but the fight is far from over. An appeal is pending on the case, and, even better, the Securities and Exchange Commission could just step in and require Schwab and other brokerage firms to drop the predatory language from their terms.
In the meantime, Public Citizen urges you to join us in telling Schwab to restore its customers' rights.
Shame on Schwab: Add your name to the petition demanding that Charles Schwab remove its forced arbitration clause and class-action ban.
Thanks for all you do,
Rick Claypool
Public Citizen's Online Action Team
action@citizen.org
