How to Sue Charles Schwab

Have you faced serious issues opening and maintaining your account with Charles Schwab? Did they close your account without legitimate reason? Maybe you tried to add a bank account to your existing IRA but an unprofessional customer service rep made a mistake that transferred money where it shouldn’t have gone. If you feel you’ve no other recourse but to sue Charles Schwab, we can help.

Charles Schwab Security Policies

Charles Schwab is very fast about safeguarding private account information and dealing with fraudulent activity.

However, Consumer Affairs and the Better Business Bureau show us that even a company as large as Charles Schwab forces their customers to deal with a lot of system errors, a lot of automatic responses, and bad customer service.

But what about situations where the Charles Schwab trading system makes a mistake calculating your trade limits or your account balance and you lose money? What do you do when the company closes your account without reason or their customer service is rude and unprofessional, giving you incorrect information? Charles Schwab customers who have been mistreated by the company on the banking or the investment end have options to fight back.

Arbitration Clauses

Chances are your contract with Charles Schwab includes an arbitration clause which prevents you from starting a class action lawsuit or even joining an existing class action lawsuit against the brokerage.

Class action lawsuits are when a group of people file the same complaint against a company. You can only file a class action lawsuit against Charles Schwab if there is no arbitration clause specifically listed in your agreement with them.

In most cases your contract prohibits you from a class action lawsuit leaving you the only option of small claims court or consumer arbitration. Small claims court is significantly more complicated and time-consuming so if you do have an issue with Charles Schwab and you have the arbitration clause in your contract, a consumer arbitration solution is much better for you.

Suing Charles Schwab in Small Claims Court

So, if you have a problem that you need fixed, you can try a small claims court. There are some limitations here. Small claims courts in different counties have monetary limits for the amount of damages you can request. This means there’s a minimum and a maximum to how much money you can ask Charles Schwab to give you in order to solve the problem they caused.

Most small claim courts have a minimum of $2,500 and a maximum of $10,000 in damages.

If your claim is less than that amount or more than that amount you will have to use consumer arbitration.

Given that Charles Schwab is a financial institution most people are asking for monetary compensation. If you lost money or you were overcharged or you missed out on the potential to make a lot of money on an investment because of a system error, you might want that money back. This is called a monetary settlement. If you want anything other than money, it’s an equitable settlement and most small claims courts only handle monetary settlements.

If you are seeking equitable only or equitable and monetary compensation you will likely have to use consumer arbitration. Check with your local County Clerk to see what your county regulations are for small claims court.

This can be a very time-consuming process, taking months to complete because you are working through the court system. However it is faster and simpler than a traditional lawsuit and you could get compensation in exchange for dropping the claim early.

Steps to Sue Charles Schwab with Small Claims Court

Every state and some counties within the state have very similar requirements but you will need to check with your local courthouse to make sure you know exactly what is required of you.:

  1. Send Charles Schwab your demand letter. This demand letter doesn’t have to be overly complicated. It can be a straightforward, simple document where you tell Charles Schwab who you are and include your name but your contact information and your account number, what the issue is, and what you want from them to solve the problem. You have to do this before you file your claim. When you’re done with your demand letter you have to mail a hard copy preferably through certified mail so that you can verify the delivery to the official address for Charles Schwab which is:

CHARLES SCHWAB & CO., INC.

THE CORPORATION TRUST COMPANY

CORPORATION TRUST CENTER 1209 ORANGE ST

WILMINGTON, DE 19801*

*Note: The address you should use will be listed in your individual subscriber agreement.

  1. Fill out your state required forms. Sometimes Counties have additional forms. The correct forms will be freely available on your state court website. Make sure you fill out enough copies too. Most states require you to file forms in triplicate so that they get a copy, Charles Schwab gets the copy, and you get a copy. If you show up to the courthouse with the wrong number, they won’t accept your claim.
  2. Formally file all of your documents with the court. Most courts require you come to the courthouse physically during office hours and hand the documents to the county clerk. If you’re lucky your court might allow you to submit it online, via fax, or in the mail. You also have to pay a filing fee. You can see how much this is on your Courts website. Once it’s looked over by the county clerk and accepted you will get a stamped copy of your documents as well as a court date.
  3. You have to officially serve Charles Schwab now that the date is set. This means delivering a copy of all the file papers to Charles Schwab. Your court website will have instructions on how to deliver the forms. Follow these meticulously. If you fail to follow a single requirement your claim will be dropped and you won’t get anything.
  4. Make sure you show up for your court date with all the paperwork and the evidence to explain what Charles Schwab did and why they should pay you the compensation you requested.

Use Consumer Arbitration

If you are unable to use small claims court because the amount falls outside of the accepted limits, or this simply seems too time-consuming and too difficult, you can always use a consumer arbitration process to simplify the resolution of your claim.

This is a process that brings with it the chance of getting an early settlement. A lot of big companies like Charles Schwab will settle as soon as the arbitration process has been initiated so you might end up with a solution to your problem a lot sooner.

Steps to File a Claim Against Charles Schwab with Consumer Arbitration

  1. Submit your complaint to Charles Schwab with an official, legal notice of dispute. With help from our online interface, you can tell us what your issue is and how you want Charles Schwab to fix it. We’ll handle the legal notice for you.
  2. The information you submit is used to generate that hard copy demand letter that is sent on your behalf to Charles Schwab. This step should seem familiar because it’s what you would have to do all on your own if you used a small claims court. We include a time frame with a notice that if Charles Schwab doesn’t resolve your problem by that time frame you will use consumer arbitration as the next step.
  3. At this point Charles Schwab might settle. They could contact us or contact you directly and if they give you an offer that you like, feel free to accept it.
  4. If they don’t reach out or you don’t like their offer, the next step is to file your arbitration documents from the American Arbitration Association. We generate these for you and use a “documents only” arbitration process which means communication is done via documents, not telephone or in person meetings. If however you want someone to call you so you can speak to an actual person, or you want to have an in-person meeting with Charles Schwab, you can request that.
  5. In keeping with the arbitration clause in your Charles Schwab agreement, these documents get filed with the American Arbitration Association who appoints a case administrator to manage your claim, collect the documents, and schedule appointments between you and a representative from Charles Schwab. An arbitrator is appointed who will set a date for your hearing in accordance with the format you want, the documents only style, the phone call, or the in-person meeting.

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