WASHINGTON, D.C. — Today, U.S. Sen. Sherrod Brown (D-OH) – ranking member of the Senate Committee on Banking, Housing and Urban Affairs – and U.S. Rep. Brad Sherman – a member of the House Financial Services Committee – reintroduced legislation that will give Wells Fargo customers who were victims of a fraudulent account scheme their day in court.
From at least 2011 to 2015 Wells Fargo opened millions of fraudulent accounts – two million bank accounts and 565,000 credit card accounts – in its customers’ names. Now Wells Fargo is using the forced arbitration clauses it tucked away in the fine print of contracts customers signed when they opened legitimate accounts to block them from suing over the fraudulent accounts.
Wells Fargo recently fired a group of senior managers amid the bank’s ongoing internal investigation of the scandal, but the bank has refused to stop using forced arbitration clauses against defrauded customers. Brown has been leading the effort in the Senate to push Wells Fargo to end this practice.
“Forced arbitration is shielding Wells Fargo from being held accountable for harming its customers, directly and indirectly,” said Brown. “Wells Fargo’s customers never agreed to sign away their right to fight back against fraud and deceit. We need to give customers back their ability to seek justice in court so they can be made whole again.”
“I want to thank Senate Banking Committee Ranking Member Sherrod Brown for working with me to introduce the Justice for Victims of Fraud Act. This bill will give defrauded Wells Fargo customers the opportunity for their day in court,” said Sherman. “If customers never authorized the opening of a phony credit card or checking account, there is no reason they should be bound by the arbitration agreement they were forced to sign when they set up a legitimate account.”
The Justice for Victims of Fraud Act will work hand-in-hand with a new oversight rule that the Consumer Financial Protection Bureau (CFPB) put out in May to strengthen protections for consumers. Whereas the CFPB proposal would apply only to contracts signed after the rule is final – this bill would allow victims of Wells Fargo’s fraud to seek their day in court even if they signed contracts that included arbitration for their legitimate accounts in the past.
The bill is cosponsored by U.S. Sens. Patrick Leahy (D-VT), Patty Murray (D-WA), Ron Wyden (D-OR), Richard Durbin (D-IL), Jack Reed (D-RI), Robert Menendez (D-NJ), Bernie Sanders (I-VT), Robert Casey (D-PA), Sheldon Whitehouse (D-RI), Mark Warner (D-VA), Jeff Merkley (D-OR), Al Franken (D-MN), Richard Blumenthal (D-CT), Brian Schatz (D-HI), Mazie Hirono (D-HI), Elizabeth Warren (D-MA), Heidi Heitkamp (D-ND), and Chris Van Hollen (D-MD).
The bill has been endorsed by Americans for Financial Reform, Public Citizen, NAACP, American Association for Justice, Allied Progress, Center for Responsible Lending, Economic Policy Institute Policy Center, California Reinvestment Coalition, Consumers for Auto Reliability and Safety, Consumer Federation of America, National Consumers League, Public Justice, Franciscan Action Network, Media Voices for Children, Woodstock Institute, Tennessee Citizen Action, National Consumer Law Center (on behalf of its low income clients), National Association of Consumer Advocates, The Impact Fund, Consumer Watchdog, Alliance for Justice, Workplace Fairness, Homeowners Against Deficient Dwellings, Consumer Action, Consumers Union, and Communications Workers of America (CWA).
Brown has repeatedly pressed Wells Fargo for concrete answers over how the bank plans to make cheated customers whole, including plans to restore damaged credit scores. In a letter Brown led with U.S. Sen. Patrick Leahy (D-VT), he pointed out that forced arbitration clauses allowed Wells to force aggrieved customers into secret proceedings and prolong the fraud with impunity for far too long.
Brown has been working to oppose forced arbitration clauses beyond the financial sector as well. He successfully pressed the Department of Education to follow through with strict new oversight rules that would deny taxpayer funding to colleges that use forced arbitration, specifically for-profit institutions like the recently failed ITT Tech that often cheat students out of the education they deserve.