Wells Fargo Uses Arbitration to Suppress False Bank Accounts Lawsuits
Posted by PKSD Law Firm on Dec 09, 2016 in Uncategorized
Controversy has surrounded Wells Fargo since it was revealed earlier this year that its employees created more than two million fake banking and credit card accounts with customers’ private information in an attempt to meet intense sales quotas.
In response to the thousands of lawsuits that have been filed by affected consumers against the banking giant, the company is attempting to force all complaints into arbitration, a process that opponents say often favors large corporate entities.
Forced arbitration has been criticized for its bias toward corporations who are often favored by the arbitrators they hire to handle the cases because there are no restrictions for conflicts of interest in arbitration.
These legal proceedings are also held in private settings, outside of the courtroom and away from public scrutiny. Critics have claimed that since arbitration proceedings are confidential and not legally accessible to the public, Wells Fargo’s tactics absolve it from any true accountability and are a method to cover up its misconduct while trying to downplay the true scale of its corrupt practices.
By forcing these lawsuits into arbitration, Wells Fargo is denying customers their right to a fair trial with a judge and jury. It will also prevent customers from joining together to form a class action lawsuit. Instead, each claim will be settled individually, belittling the customers’ power.
Furthermore, the rulings made in this process are almost impossible to overturn.
Wells Fargo has responded to those opposing the decision by stating that the contracts customers signed when first opening accounts with the bank contained arbitration clauses that also extend to any false accounts opened in their name.
A California federal judge last year ruled in favor of Wells Fargo’s claim that the clause creates a base that grants Wells Fargo the right to force customers into arbitration for any dispute concerning the creation of a bank account.
Wells Fargo has paid $185 million in penalties and $5 million to customers who were affected by the fake accounts. The bank has stated that it will fully reimburse any customer that suffered a loss and that it is using arbitration as a “last resort.”
As advocates for the rights of consumers, the personal injury attorneys at Pitman, Kalkhoff, Sicula & Dentice, are strongly against the use of forced arbitration, which fails to protect the rights of consumers. We strongly encourage everyone to thoroughly read contracts and other legal documents before signing them.