Indeed, at least one consumer represented in this class action never even banked with Wells Fargo.įortunately, the CFPB has proposed a rule that would restore consumers’ right to join together and challenge banks in court, even when the fraud is not as egregious or widespread as Wells Fargo’s. While forced arbitration has been upheld in many contexts, it is clear Wells Fargo customers could not reasonably understand that signing a standard agreement for one product would block them from suing over a separate account they never agreed to open. Wells Fargo customers in the Utah case have argued - quite logically - that the bank cannot use its contracts as a shield against liability for systemic fraud. Indeed, consumers paid more restitution to Wells Fargo in arbitration than the other way around. Of the 48 cases that advanced to a final hearing, only seven consumers in eight years received a dime from Wells Fargo with the bank paying out just $349,549. Looking at the numbers, it is not surprising so few consumers file. Yet in practice, forced arbitration is not simply an alternate forum, but a way to ensure the bank never has to give consumers their money back.Ī recent report from the nonprofit Level Playing Field found just 215 Wells Fargo customers pursued claims against the bank in arbitration since 2009, despite millions of fake accounts exposed by the CFPB. It may seem strange that the bank would prefer to face hundreds of thousands of consumers one by one and not defend itself in a handful of class-action lawsuits. Rather than addressing this systemic wrongdoing, Wells Fargo moved to keep the scandal out of the public eye by pointing to “ripoff clauses” buried deep in its contracts that force consumers to file individual claims in secret hearings. A recent report from the Office of the Comptroller of the Currency noted 700 whistleblower complaints related to the aggressive cross-selling quotas pushed by upper management as far back as 2010, and customers tried to sue the bank over fake accounts since at least 2013.
While Wells Fargo initially responded by firing 5,300 front-line employees it deemed “bad apples,” bank executives had, in fact, been made aware of this fraud years earlier, warned directly by workers on multiple occasions. Last September, the Consumer Financial Protection Bureau led a $185 million enforcement action against the bank for opening as many as 3.5 million fraudulent accounts and credit cards, which it then used to charge illegal fees. Even as the bank’s PR machine loudly trumpets a focus on restoring consumer trust, Wells Fargo is insisting once again that defrauded customers should be barred from having their day in court. On June 7, a Utah judge will decide whether more than 50 consumers defrauded by banking giant Wells Fargo in its fake account scandal will be forced to pursue claims one by one in a secret arbitration system.
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