“Forced arbitration is shielding Wells Fargo from being held accountable for tanking customers’ credit scores and charging them fraudulent fines,” said Sen. Brown. “Wells Fargo’s customers never intended to sign away their right to fight back against fraud and deceit. We need to give customers back their ability to seek justice in court so they can be made whole again.”
The legislative initiative follows earlier congressional testimony by John Stumpf, the former CEO of Wells Fargo who said that the bank would continue its practice of forced arbitration, despite Sen. Brown pressing for clear answers as to how cheated customers with damaged credit scores would be treated.
The nation’s third largest bank by assets, Wells Fargo fraudulently created an estimated 2 million credit card and deposit accounts.
Forced arbitration authorizes an arbitrator selected and paid by the bank to settle customer disputes. It is also an approach that is usually hidden in the fine printed details of consumer credit agreements. If a consumer is dissatisfied with the decision of the arbitrator, he/she is denied the right to sue or further question the decision.
Already, Brown’s bill has support of 14 Senate co-sponsors representing Connecticut, Hawaii, Illinois, Massachusetts, Minnesota, Montana, New Jersey, North Dakota, Pennsylvania, Rhode Island, Vermont and Virginia.
Additionally, the measure is supported by a growing list of organizations that include the NAACP, California Reinvestment Coalition, Public Justice, the Franciscan Action Network, the Economic Policy Institute, National Consumer Law Center, and Americans for Financial Reform.
Speaking on behalf of the Center for Responsible Lending, another organizational supporter, Melissa Stegman, a Senior Policy Counsel said, “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. . . 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.”
Defrauded consumers do not deserved to be financially victimized a second time. Instead of trying to minimize the costs Wells Fargo will accrue, both the bank’s long-term interests and its customers would be better served by fully acknowledging its actions, providing fair restitution, and enacting reforms to ensure that these kinds of illegal actions will not happen again.
(Charlene Crowell is communications deputy director with the Center for Responsible Lending. She can be reached at charlene.crowell@responsiblelending.org.)
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