STUMP APPEARS BEFORE SENATE PANEL: Wells Fargo & Co. Chief Executive John Stumpf, under fire before the Senate Banking Committee about a fake account scandal, sidestepped today a question regarding the bank’s stance on forced arbitration. Here is an account from The Los Angeles Times, which said Wells Fargo customers trying to sue over fake accounts have encountered arbitration clauses as a roadblock:
“When customers sign up for accounts at Wells Fargo — and at most other banks — they sign contracts that oblige them to resolve disputes with the bank in private arbitration rather than in court. Wells Fargo has successfully argued that applies even in cases where customers have accused the bank of opening fake accounts in their names.
“The argument goes something like this: Although a customer obviously didn’t sign a contract when a fake account was created for them, agreements they signed when opening genuine accounts nevertheless require them to take all disputes with the bank to arbitration. Judges have generally agreed.
“Today, Sen. Sherrod Brown (D-Ohio) asked Wells Fargo Chief Executive John Stumpf whether the bank will continue to take that stance.
“‘I’d have to talk to my legal team,’ Stumpf said. ‘I’m not an expert in that.’”
Our sister organization, Alliance for Justice, has published at its Justice Watch blog a post titled, “Why the Wells Fargo Scandal Shows the Need to End Forced Arbitration.” The post explained, “If consumers cannot access the courts, scandals will be harder to uncover and victims will find it nearly impossible to achieve justice.”
In The Hill, Robert Weissman of Public Citizen and Lisa Donner of Americans for Financial Reform wrote an op-ed titled, “Why Wells Fargo got away with it for so long.” They wrote, “Wells Fargo contract provisions blocked consumers from suing the bank in court. It’s past time to prohibit the ‘ripoff clauses’ that prevent consumers from enforcing their most basic legal rights.”