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
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
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.