Legislation introduced by two Democratic lawmakers on Thursday would allow Wells Fargo & Co. customers to go to court, instead of private arbitration, to resolve claims about accounts opened without authorization, according to a media release.
The bill, which faces an uphill battle in Congress, is a challenge to Wells’ effort to force plaintiffs in a lawsuit involving unauthorized accounts to resolve claims in closed-door arbitration proceedings.
Wells, in a September settlement with the U.S. Consumer Financial Protection Bureau and other regulators, agreed to pay $185 million in penalties and $5 million to customers for opening up to 2 million deposit and credit-card accounts in their names without their permission.
The Justice for Victims of Fraud Act of 2016, introduced by Senate Banking Committee Ranking Minority Member Sherrod Brown from Ohio and Representative Brad Sherman from California, takes aim at mandatory arbitration clauses in Wells Fargo account-opening agreements.
Wells Fargo’s agreements prohibit customers from joining class actions or suing the bank. Instead, they require individual, closed-door arbitration.
The bill would allow individuals who had accounts opened without permission to sue Wells Fargo in court, even if they signed arbitration agreements for other legitimate Wells Fargo accounts, according to a statement from the lawmakers.
Wells, on November 23, filed a motion in a U.S. District Court in Utah, asking a judge to order plaintiffs suing the bank about the accounts to resolve their disputes in private arbitrations instead of in court.
The case was the first class action lawsuit filed against Wells since settling with regulators.
Wells Fargo is providing free mediation services to resolve disputes, a spokesman said in a statement.
“If a resolution is not reached, the arbitration clause…allows for a forum in which a customer has his or her dispute heard and resolved quickly and efficiently within a neutral, third-party legal process,” the spokesman said.
Last year, a court dismissed an earlier lawsuit against Wells Fargo, saying that customers had signed arbitration clauses when opening legitimate accounts.
(Reporting by Suzanne Barlyn; Editing by Andrew Hay)
- First Lawsuit Over Wells Fargo Sales Practices Filed
- Wells Fargo Account Scandal Included Small Businesses, Says Senator
Was this article valuable?
Here are more articles you may enjoy.