Suing a Bank: When You Can and Can Not
In 2017, a proposed rule from the Consumer Financial Protection Bureau that protects banking consumers was denied. Consumers currently cannot sue banks and are forced to settle for out-of-court arbitration. However, there are instances where you can sue banks in small claims courts.
In this article, we will provide you with some basic guidelines on how to sue a bank and how you can do so easily and effectively using the world’s first robot lawyer, DoNotPay.
Legal Grounds for Suing a Bank
As a consumer, there are protections afforded to you by the law. There are different reasons for suing a bank and some may not hold their weight in a small claims court. But if you believe your bank has violated any of your consumer protection rights, then you can proceed to sue. Some relevant laws are as follows:
- Gramm-Leach-Bliley Act (GBLA) – protects your nonpublic personal information (NPI)
- Truth in Lending Act (TILA) – banks are required to provide accurate information on the rate of interest, monthly payment, and others that relate to mortgage and credit loans
- Fair Debt Collection Practices Act (FDCPA) – banks are prohibited from using harassing tactics or using false information to collect a valid debt
- Fair Credit Reporting Act (FCRA) – banks are required to put correct information on your credit report and remove those which are deemed false
Which Credit Card Companies Can You (And Can’t) Sue?
Financial institutions have a way to protect themselves from being sued by putting mandatory arbitration agreements in the contract. Nonetheless, some banks do not have mandatory arbitration clauses, and others allow consumers to opt-out of it. Refer to this table below:
|Banks||Mandatory Arbitration Clauses||Opt-out Option||Period to Opt-Out|
|American Express||✔||✔||45 days|
|Banco Popular||✔||✔||90 days|
|Bank of America||✖||N/A||N/A|
|Citizens Bank NA||✔||✔||45 days|
|Credit One Bank||✔||✖||N/A|
|Fifth Third Bank||✔||✖||N/A|
|First National Bank of Omaha||Only for
|First Premier Bank||✔||✔||30 days|
|Key Bank||✔||Only for
|Merrick Bank||✔||✔||60 days|
|Navy Federal Credit Union||✖||N/A||N/A|
|Pentagon Federal Credit Union||✖||N/A||N/A|
|PNC Bank||✔||✔||45 days|
|State Employees Credit Union||✖||N/A||N/A|
|State Farm Bank||✖||N/A||N/A|
|SunTrust Bank||✔||✔||45 days|
|Synchrony Bank||✔||✔||60 days|
|USAA Federal Savings Bank||✔||✖||N/A|
|World’s Foremost Bank (Cabela’s)||✖||N/A||N/A|
Suing a Bank for Negligence
Negligence or professional malpractice is one of the many reasons to go after a bank. This may come in the form of a banking institution selling you a product that resulted in you going bankrupt. When this happens, you may not have the funds to hire a lawyer and pay exorbitant fees. We recommend a few risk mitigation steps on how to sue a bank for professional malpractice without having to add to your financial problems:
- Step 1: Consider third-party litigation funding. The funder can pay for all the expenses incurred in the lawsuit and gets a percentage (10-30%) of the awarded damages if your case wins.
- Step 2: Draft a conditional fee agreement (CFA). A CFA lets you avoid hefty costs such as fixed lawyer’s fees or hourly rate agreements. Instead, the lawyer will only be paid if the case wins.
- Step 3: Consider after the event (ATE) insurance. This type of insurance is purchased after an event has resulted in a dispute, in contrast to health insurance, which is purchased beforehand. ATE insurance can protect you from the damages in case you lose in court. However, it’s important to note that in case you win in court, a portion of your reward will be needed to pay for the premium.
Suing a Bank for Not Refunding Fraudulent Charges
Depending on your situation, you can get your money back after a fraudulent charge. If you were scammed via your debit card, you may get some or all of the money back depending on how fast you report the incident, as follows:
- If you report your lost card or fraud immediately and the card has not been used yet, you will receive all of your money back
- If the loss is reported within 48 hours, you may be responsible for up to $50
- If the loss is reported within 48 hours to 60 days, you may be responsible for up to $500
- If the loss is reported after 60 days, you may be responsible for all fraudulent payments
Victims of credit card scams have a more straightforward way of getting your money back. Credit cards are highly regulated by the Fair Credit Billing Act and can provide better protection. The act limits your liability to $50, and if you report the incident within 30 days, most banks are willing to waive the liability fee.
How to Sue a Bank With DoNotPay
Suing a bank in most situations is complicated and time-consuming. However, DoNotPay can simplify the process for you! It removes the cumbersome process of drafting letters and filing forms, and all you have to do is:
- Log-in to DoNotPay and select the Sue Now product
- Enter the dollar amount you are owed
- Select whether you want a demand letter or court filing forms
- Describe the reason for the lawsuit and submit any applicable details, including photo proof
That’s it! DoNotPay will then generate a demand letter or court filing forms for you. We’ll even mail a copy of your demand letter to the individual or business you are suing (if you would like us to, of course).
Not only can you sue a bank with DoNotPay, but also fight against:
DoNotPay Does It All
You don’t always need to hire a lawyer – get your legal documents filled out, signed, and notarized all in one app! Here are some legal forms DoNotPay can help you with:
But that’s not all! We also protect your rights as a consumer by: