Did the banking customer sign away her rights under an arbitration agreement?

This case holds that the trial court did not have enough information to determine whether the plaintiff in this potential class action suit against a credit union signed away her rights in an arbitration agreement that would also waive any class action. The issue is whether the crafty consent document was sufficiently visible to plaintiff when she opened her account with Hudson Valley Credit Union.

The case is Zachman v. Hudson Valley Credit Union, issued on September 14. Plaintiff says the credit union wrongly assessed and collected overdraft fees and insufficient funds fees on checking accounts that were not actually overdrawn. She filed this lawsuit, but HVCU filed a motion to compel arbitration, which would take the case away from the jury and provide the parties limited discovery and other rights. The credit union said that plaintiff was on "inquiry notice" about the arbitration agreement when she opened the account. As the Court of Appeals puts it, HVCU says "she agreed to an Internet Banking Agreement that incorporated by reference the revised Account Agreement containing the arbitration and class action waiver provisions, and that HVCU published the modified Account Agreement on the HVCU website which Zachman used for online banking."

That "inquiry notice" arrangement may seem unfair, as it's not the same as a customer signing an arbitration agreement with a pen and paper. But that's arbitration these days. You can consent by signing onto a banking arrangement online. While the credit union's senior compliance officer said the arbitration agreement can be accessed on the bank's website by either running a search on the webpage or clicking on the Resources tab on the website, plaintiff said she never got any such agreement in the mail and the agreement was obscured on the website and therefore not readily visible such that she was on notice that any disputes with the bank would go to arbitration.

While the district court sided with plaintiff on this issue, the Court of Appeals remands for more factfinding. The trial court has to decide whether an Internet-based contract like this put plaintiff on "inquiry notice" of the arbitration agreement. You can actually "agree" to such a provision by clicking "I agree" or similar language while processing your application for the banking services online. We all do this; we click here and there until we get the services we want, and God knows what we just consented to. But it's legal under the case law. The problem here is that the "agreement" may or may not have been readily visible to plaintiff. The district court will have to look at screenshots of the bank's website to make that determination.