Brown, Sherman Bill Would Prevent Wells Fargo from Using Forced Arbitration Clauses in Real Accounts to Block Customers from Suing over Fraudulent Ones
The Center for Responsible Lending (CRL) today applauded the introduction of the Justice for Victims of Fraud Act of 2016, a bill to give Wells Fargo customers who were victims of a fraudulent account opening scheme their day in court. The legislation was introduced by U.S. Senator Sherrod Brown (D-OH), ranking member of the Senate Committee on Banking, Housing, and Urban Affairs, and U.S. Representative Brad Sherman (D-CA), a member of the U.S. House Financial Services Committee.
Wells Fargo is using the forced arbitration clauses it tucked away in the fine print of contracts customers signed when they opened legitimate accounts to block them from suing over the fraudulent accounts. Employees from Wells were under pressure to open these accounts to meet sales goals.
"This legislation gives these defrauded customers the opportunity to seek justice in court and is a step in the right direction in bringing fairness to consumer finance. Forced arbitration should not shield Wells Fargo from its deliberate efforts to defraud their customers," said CRL Senior Policy Counsel Melissa Stegman. "Opening fraudulent accounts is not the only abusive tactic Wells Fargo has committed--they are also notorious for manipulating transactions in order to charge excessive overdraft fees to their customers. CRL applauds Senator Brown and Congressman Sherman for their strong leadership in protecting consumers."
The bill would work hand-in-hand with a new oversight proposed rule that the Consumer Financial Protection Bureau (CFPB) released in May to strengthen protections for consumers. Whereas the CFPB proposal would apply only to contracts signed after the rule is final–this legislation would allow victims of Wells Fargo’s fraud to seek their day in court even if they signed contracts that included arbitration for their legitimate accounts in the past.
The bill is cosponsored by U.S. Sens. Patrick Leahy (D-VT), Patty Murray (D-WA), Richard Durbin (D-IL), Jack Reed (D-RI), Robert Menendez (D-NJ), Robert Casey (D-PA), Jon Tester (D-MT), Mark Warner (D-VA), Jeff Merkley (D-OR), Al Franken (D-MN), Richard Blumenthal (CT), Mazie Hirono (D-HI), Elizabeth Warren (D-MA), and Heidi Heitkamp (D-ND).
The bill has been endorsed by the Center for Responsible Lending, the American Association for Justice, Consumers Union, the National Association of Consumer Advocates, the National Consumer Law Center (on behalf of its low-income clients), Americans for Financial Reform, the NAACP, Media Voices for Children, Allied Progress, the Woodstock Institute, the Franciscan Action Network, the Economic Policy Institute Center, California Reinvestment Coalition, Consumers for Auto Reliability and Safety, National Consumers League, and Public Justice.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Ricardo Quinto at email@example.com.