Recent changes to the Michigan State University Federal Credit Union, or MSUFCU, Membership and Account Agreement features a mandatory Arbitration Agreement, including a waiver of class action lawsuits.
This agreement offers a way for members to resolve legal disputes between themselves and the credit union outside of the civil court systems.
Michael Clark, Vice President of Marketing and Public Relations at the American Arbitration Association defined arbitration as a process with similar outcomes to civil court cases.
“Arbitration is just another way to have disputes settled,” Clark said.
In an arbitration decision, an impartial third-party, the arbitrator, decides the resolution of a dispute with no action taken in the civil court.
Members have the option to opt-out of the Arbitration Agreement by notifying MSUFCU, of their decision within 30 days of receiving notice of these changes.
MSUFCU Chief Marketing Officer, Deidre Davis, describes the process as one which is mutually beneficial to both the credit union and its members.
“A credit union is owned by all of its members, so we don’t have shareholders that we’re trying to make a profit for,” Davis said. “ ... Doing what’s best for our members is doing what’s best for the credit union.”
As opposed to litigations, Davis describes the process as a quicker and more cost-effective option for both parties involved. In accordance with MSUFCU’s arbitration provision, she said, the credit union will cover the costs of arbitration. If a resolution were to find the credit union at fault, they would also pay the member’s attorney fees and any potential arbitration award that would be provided to that member.
“I think the common misconception is that somehow the member is giving up rights that they have that guarantee them a fair outcome,” MSUFCU Chief Legal Counsel, Steve Owen said.
According to Owen, it is important to understand what exactly arbitration means and what both parties give up in pursuit of it.
“When a matter is arbitrated, pursuant to an arbitration agreement like this, the parties are agreeing not to afford themselves the opportunity to be in the civil court system," Owen said. " … We don’t mean to suggest that it is insignificant that the parties are giving up the jury trial right, because that is a constitutionally protected right unless the parties agree to arbitrate."
In enforcing the arbitration agreement, Owen said the hope is to benefit all members of the credit union by providing a fair, faster and less expensive dispute resolution process. "Parties in arbitration receive very similar outcomes as they would in the civil courts system," Owen said.
Arbitration agreements as implemented in the updated Membership and Account Agreement are supported by the Federal Arbitration Act and upheld by the U.S. Supreme Court.
“The mission of the credit union is to help members achieve their dreams, and we do that by providing superior service and through really great … experiences for all members,” Davis said. “We are always intending to act in the best interest of our membership.”