Goldman Offers Incentives to Keep Marcus Clients Away From Court
(Bloomberg) — Goldman Sachs Group Inc. is offering customers of its consumer-finance business enticements to keep their grievances out of the courts.Marcus, the Goldman product that offers savings accounts and makes personal loans, will cover certain expenses for its customers who elect arbitration — the preferred tool of large banks to solve disputes.
While banks say arbitration is faster and cheaper for the public than litigation, consumer advocates say the practice lets financial institutions avoid accountability. JPMorgan Chase & Co. last week faced criticism for reviving forced arbitration for credit-card holders. The bank later clarified that it won’t shut the accounts of credit-card customers who reject the policy. Goldman Sachs is similarly saying its customers have the opportunity to opt out of the process.
“We believe these changes give more power to our Marcus consumers while still maintaining the increased efficiency, cost-savings and flexibility afforded by arbitration,” Andrew Williams, a spokesman for Goldman Sachs, said. The firm said the change makes it easier for people to bring small-dollar claims.
The New York Post on Wednesday reported on the contractual changes being proposed by Marcus.
For Goldman Sachs, doing business with Main Street is a departure from its traditional businesses dealing with large companies, institutional investors and hedge funds, so it’s only now starting to face some of the tangles of consumer-focused businesses that other banks have grappled with for years.
Last year, a Florida woman alleged in a legal filing that after taking a loan from Marcus, she received “multiple collection calls on multiple days, in multiple weeks, over multiple months,” over a a five-month period. The filing argued that such an effort was tantamount to harassment.
Goldman Sachs and the Florida resident ultimately agreed to dismiss the case without prejudice. That’s typically done when both parties reach a settlement.
Marcus recently topped the JD Power personal-loan satisfaction study, Williams said.