Bill in Response to Wells Fargo Scandal Clears Key Vote

Senator Bill Dodd speaks

(From Press Release) – A bill by Senator Bill Dodd (D-Napa) to protect victims of mass fraud and identity theft cleared a key vote today in the Senate Judiciary Committee on Tuesday. Dodd’s bill was introduced in response to the recent Wells Fargo scandal where millions of accounts were fraudulently opened without consent, using consumer’s personal information from existing accounts. The legislation, co-sponsored by California State Treasurer John Chiang, would give victims their day in court by preventing financial institutions from using forced arbitration clauses in cases where they perpetrated fraud.

“The idea that consumers can be blocked from our public courts when their bank commits fraud and identity theft against them is un-American,” said Senator Dodd. “Allowing victims their day in court helps them recover and can prevent more victims by putting an end to illegal business practices. If SB 33 was already law, Wells Fargo would have been publicly held to account years ago, and the fraud could have been prevented from spreading.”

Late last year, it came to light that Wells Fargo Bank employees had fraudulently used their customers’ personal information to create over two million fake accounts without consent over the course of five years. Some of these fraudulent accounts harmed the credit of victims and incurred fees that were passed along to the victims. In the aftermath of the scandal, California State Treasurer John Chiang suspended business dealings with Wells Fargo as a sanction. The bank has had to pay over $185 million in regulatory fines for their illegal use of consumer information.

“Instead of allowing victims to have their day in court where an independent judge or jury can arrive at a verdict following an open and fair trial, Wells Fargo is pushing customers seeking justice into forced arbitration,” said Treasurer John Chiang.  “While the bank’s latest marketing slogan is ‘On the side of customers,’ it continues to deny its victims their right to be made whole by coercing its customers into a secretive process that tilts in favor of corporations.”

Many of the victims attempted to sue the bank for damages and to recover their losses. However, Wells Fargo successfully argued that their customers waived their right to sue when they opened their original, legitimate accounts, which were the source of the personal information used to create the fraudulent accounts. The only recourse left to victims was through binding arbitration. Arbitration cases tend to favor the corporate defendant as they are able to select the arbitrator overseeing the case.

“Wells Fargo’s customers were ripped off twice,” said Richard Holober, Executive Director of Consumer Federation of California. “First, the bank created two million fraudulent accounts. Then when consumers tried to sue, the bank forced them into company-dominated arbitration hearings. SB 33 will guarantee that the victims of a bank’s identity theft will get their day in court.”

Dodd’s bill, SB 33, will prohibit the use of forced arbitration in cases where a financial institution has wrongfully used consumer information to commit fraud. Dodd’s bill has already gained support from the Consumer Federation of California, the Consumer Attorneys of California, and numerous consumer advocates.



Enter the maximum amount you want to pay each month
$
USD
Sign up for

About The Author

Disclaimer: the views expressed by guest writers are strictly those of the author and may not reflect the views of the Vanguard, its editor, or its editorial board.

Related posts

Leave a Reply

X Close

Newsletter Sign-Up

X Close

Monthly Subscriber Sign-Up

Enter the maximum amount you want to pay each month
$ USD
Sign up for