Wells Fargo Trying to Dismiss Lawsuits in Favor of Arbitration
Posted on behalf of D'Amico & Pettinicchi, LLC on Dec 07, 2016 in Personal Injury
Across the country, countless consumers affected by the unauthorized creation of thousands of Wells Fargo sham accounts have sued the bank for reimbursement for improper fees and other fraudulent charges to their accounts.
In response, Wells Fargo has filed motions in many federal and state courts to dismiss these lawsuits and force consumers to resolve disputes in private arbitration, a process that often favors corporations.
In forced arbitration, corporations choose an arbitrator to settle disputes with consumers. Unfortunately, judicial rules limiting conflicts of interest do not apply to arbitration, allowing corporations to choose arbitrators who consider the corporations to be their clients.
A 2015 study by the Consumer Financial Protection Bureau revealed that consumers win arbitration just 20 percent of the time.
Wells Fargo's lawyers argue that when consumers opened accounts with the bank, they signed legitimate contracts containing arbitration clauses. They claim that these clauses also apply to fraudulently created accounts and credit cards.
Some judges have agreed, including a federal judge in California who ruled last year that the idea of forcing consumers into arbitration over accounts they never agreed to open is not "wholly groundless."
Agreeing to forced arbitration restricts consumers from filing lawsuits against corporations on their own or banding together with other consumers to file a class action lawsuit. This is one of the most powerful tools consumers have for challenging deceitful practices by large corporations.
Arbitration also helps conceal corporate misconduct from regulators and the public because the law prohibits arbitration from being made public.
Wells Fargo has paid $185 million in penalties and $5 million to consumers for creating up to two million accounts in customers' names without their permission.
According to a statement, the bank is working with customers to reimburse fraudulent fees and is offering free mediation services for unresolved disputes. It says arbitration is a "last resort."
The Connecticut personal injury lawyers at D’Amico & Pettnicchi are opposed to forced arbitration that helps corporations get away with fraud and other wrongdoing that harms consumers. Arbitration also strips away your constitutional rights to a jury trial and written record of the case.
We strongly encourage you to carefully read contracts and other documents before you sign them to find out if they include arbitration clauses. Signing away your rights could allow corporations to harm you and prevent them from being held accountable.