Q. I have a home equity line of credit that has been open for about three years. There is no outstanding balance, but I do use it from time to time to manage cash flow. The bank sent a notice requesting that I agree to a change in terms that would add an arbitration provision. And there’s a class-action waiver. How do I decide if I should agree? And if I “opt out,” might they cancel my line of credit?

A. It’s a great question, and an action that consumer advocates simply despise.

“Mandatory arbitration is about as pernicious and undemocratic an activity that can be imagined,” said Ronald LeVine, a Hackensack, N.J.-based consumer law attorney. “Here you have one party — the stronger one — saying that any disputes are to be handled by a company that they choose. No need for courts and the messy democratic process, no public record, just let my brother-in-law decide.”

LeVine, who is also the chair of the Consumer Protection Law Committee of the state Bar Association, said those in the consumer field have fought this kind of thing for many years, and it’s even on the mind of the Consumer Financial Protection Bureau.

[callout id="66434" image="true"]

And even though consumer advocates have supported bills in the New Jersey Legislature to provide some protection, that never got anywhere. And largely, LeVine said, the Federal Arbitration Act has been held to pre-empt state laws.

“When you get down to the class-action waiver, what it means is that no efficient redress for conduct that may be rules improper can be had,” he said. “One hell of a way to treat customers.”

LeVine suggests you opt out, saying he’d be surprised if they canceled your account.

If they do, you can always find a financial institution with more consumer-friendly rules for home equity lines of credit.

More Money-Saving Reads:

• What’s a Good Credit Score?
• What’s a Bad Credit Score?
• How Credit Impacts Your Day-to-Day Life

Image: iStock