US Lawmakers Use Wells Fargo Arbitration Agreement as Example of Scams
Saturday, October, 15, 2016
Wells Fargo is under a great deal of scrutiny recently concerning a number of different legal issues. One of the most recent include the bank’s arbitration agreement that now prevents customers from suing the bank over bogus accounts opened in their names. According to the agreement, these customers who were allegedly victims of fraud are only able to arbitrate the matter, as opposed to taking the bank to court.
The agreement includes a mandatory arbitration clause inserted into account opening agreements that prohibit the joining of class actions or suing the bank in general. When asked if the agreement would be set aside in this instance, officials demurred and stated they are not legal experts.
Senator Elizabeth Warren, Democrat from Massachusetts, questioned regulators about the practice and stated, "If we had class action on this in 2010, 2009, 2008, the problem never would have gotten so out of hand.”
The reason class action is preferred is because it is more affordable. Unhappy customers would not need to pay for individual legal representation or invest in the time-consuming nature of a traditional lawsuit. Customers complain arbitration means the proceedings are confidential and decisions are often difficult to appeal, putting them at a disadvantage.
There are currently at least three lawsuits pending in a Utah federal court, filed by Wells Fargo customers and seeking class action on behalf of those who say they were harmed by the bank’s fraud and recklessness. Time will tell if the arbitration agreement in this case will be deemed inapplicable.