WASHINGTON – Sen. Sherrod Brown, D-Ohio, said Monday he plans to push legislation that would allow Wells Fargo & Co. customers to sue the bank over unauthorized accounts opened by employees trying to meet aggressive sales quotas.
The escalating scandal also drew the attention of Democratic presidential nominee Hillary Clinton, who in a speech criticized Wells Fargo and other companies that use the fine print in customer contracts to force disputes into private arbitration instead of allowing consumers to go to court.
She said Monday that if elected, she would “rein in the abuse.”
Brown’s bill, which he plans to introduce when Congress returns after the November elections, would invalidate mandatory arbitration clauses in the contracts of customers who had approximately 2 million unauthorized accounts opened in their names.
“Secret arbitration proceedings allowed Wells Fargo to get away with this fraud for far too long already,” Brown said. “And even now that it’s out in the open, Wells Fargo still hasn’t given us straight answers as to how long this fraud went on, exactly how many customers were hurt, or how the bank will restore damaged credit scores that could end up costing customers thousands of dollars.
”Giving customers back their right to take Wells Fargo to court gives them the power to ensure they are made whole and helps prevent cases like this in the future,“ he said.
Brown, an outspoken opponent of mandatory arbitration clauses, pressed Wells Fargo Chief Executive John Stumpf on the matter during the Senate Banking, Housing and Urban Affairs Committee’s Sept. 20 hearing on the bank’s recent $185 million settlement related to the opening of the unauthorized accounts.
Stumpf said he would have to discuss with his legal team whether customers would be forced into arbitration on disputes about the unauthorized accounts.
At a House Financial Services Committee hearing last week, Stumpf said he believed that the arbitration process was fair, but that the bank would pay for a mediator to assess any additional customer concerns.
”Will you let them to go to court if they want to go to court, yes or no?“ Rep. Brad Sherman, D-Calif., asked Stumpf.
Stumpf said he would not.
The Consumer Financial Protection Bureau has proposed new rules that would prevent arbitration clauses for financial products from including language that bans customers from joining in class-action lawsuits.
Such bans are common in mandatory arbitration clauses. The CFPB’s latest proposal, released in May, could take effect next year.
Clinton said in a speech in Toledo, Ohio, Monday that she would push to eliminate mandatory arbitration clauses from financial products and other consumer and employment contracts, such as those for student loans.
”We are not going to let corporations like Wells Fargo use these fine-print “gotchas” to escape accountability,“ Clinton said. ”This has become a common practice across a lot of industries – from nursing homes that mistreat seniors to for-profit colleges that defraud students. Who reads all that fine print? I don’t. So you get . mistreated, and all of a sudden they say, you can’t sue us. So we’re going to rein in the abuse.“
Clinton’s campaign said she would build on the efforts of the CFPB and other regulators to eliminate mandatory arbitration clauses by, ”ordering executive agencies to pursue additional measures to level the playing field for consumers and employees under their existing authorities.“
Brown supports the CFPB rules for financial products, but noted that they would only apply to future customer contracts.
Brown’s bill would invalidate arbitration clauses for unauthorized customer accounts at Wells Fargo or any other bank in the past.
Customers would be allowed to sue even if they agreed in other valid contracts with the bank that all disputes would be resolved through arbitration.
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