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Wells Fargo Uses Arbitration Clauses to Escape Lawsuits For Creating Thousands of Fake Bank Accounts

The prevalent use of forced arbitration agreements by corporations continues to plague our society.  Not only are they used in long-term care facilities like nursing homes, they are also used in big businesses such as banks.  Just last week, Wells Fargo took the heat in hearing rooms of congress and national television alike for scamming thousands of customers with fake accounts.

On the surface, Wells Fargo seems to be working toward redemption.  The company vowed to make it up to the customers they had wronged.  Timothy J. Sloan, the bank’s newly appointed chief executive, said that his “immediate and highest priority is to restore trust in Wells Fargo.”  However, in federal and state courtrooms nationwide, Wells Fargo is addressing their mistake a different way.

The bank has been determined to quell lawsuits that its customers have filed over the making of two million fake accounts by shifting the cases into private arbitration—a secretive legal procedure that commonly favors big businesses.

Attorneys that represent the bank’s clients say the legal motions are the bank’s efforts to minimize its accountability for the widespread deceit and escape having to face their customers in open court.

The intense pressure Wells Fargo employees were under to meet sales goals motivated them to use customers’ personal information to create fraudulent banking and credit card accounts in a sweeping scandal that has hit the San Francisco bank in the gut, forcing its longtime leader, John F. Stumpf, to retire early and stimulating a sea of rage amongst regulators and politicians of all backgrounds.

Now, Wells Fargo’s push for arbitration in recent weeks is further feeding those flames.

Jennifer Zeleny, who is one of the many Wells Fargo victims suing in federal court in Utah because of unauthorized accounts, said about the bank’s move toward private arbitration, “It is ridiculous. This is an issue of identity theft—my identity was used so employees could meet sales goals.  This is something that needs to be litigated in a public forum.”

The ugly truth about arbitration clauses is that they place consumers at a disadvantage, preventing them from coming together to file a lawsuit as a class.  Instead, these clauses force them to present their disputes one at a time, greatly weakening one of the most effective tools that American citizens have in fighting against harmful and dishonest practices by large companies.

Moreover, according to an investigation by The New York Times last year, stringent judicial rules restricting conflicts of interest are nonexistent in arbitration, allowing some companies to shift cases to friendly arbitrators.  It is also important to note that arbitration is conducted hidden from public view, and the decisions are pretty much set in stone.

Wells Fargo has defended their dishonest actions by saying that the arbitration clauses that are part of the legitimate contracts customers authorize to open bank accounts also include issues related to the counterfeit ones registered in their names.

Although some judges agree to this defense, others view it egregious.

“Wells Fargo’s customers never intended to sign away their right to fight back against fraud and deceit,” says Senator Sherrod Brown, a Democrat from Ohio.  He recently introduced a bill that would block Wells Fargo from forcing arbitration in the fraudulent account cases.

Many nursing homes across the nation use arbitration agreements to tip the odds in their favor if the patient they abused or neglected tries to take legal action.  If you or a loved one has been a victim of elder abuse or neglect in a long-term care facility, such as one in Cerritos or Glendale, California, please contact our office for a free consultation today.