AAJ Applauds Senators for Grilling Wells Fargo CEO on Bank’s Fake Account Scheme
Washington, DC— The American Association for Justice applauds members of the United States Senate for questioning Wells Fargo’s CEO on his bank’s massive scheme of fraudulently opening accounts in its customers’ names. The inquiry was part of a hearing held today in the U.S. Senate Committee on Banking, Housing, and Urban Affairs where Wells Fargo CEO John Stumpf was called to answer for the bank’s illegal actions, as well as its use of forced arbitration to cover its tracks.
“Few Wall Street practices are as abusive, unfair, and deceptive as the widespread use of forced arbitration,” said AAJ President Julie Braman Kane. “These clauses, which are hidden in millions of contracts for financial goods and services, force consumers into a rigged, secretive system set up by powerful corporations to hide wrongdoing and evade accountability. We applaud the U.S. Senate Committee on Banking for holding a hearing to examine Wells Fargo’s treatment of its customers and for shining a light on the bank’s despicable use of forced arbitration.”
Since at least 2011, more than 5,300 Wells Fargo employees opened approximately 1.5 million bank accounts and applications for approximately 565,000 credit cards without the knowledge or consent of their customers. When these customers attempted to hold the bank publicly accountable in court, Wells Fargo systematically funneled the cases into a secret, binding forced arbitration forum where the dispute would be decided by a company chosen by Wells Fargo. The secretive nature of forced arbitration allowed the bank to hide its wrongdoing from the public, the media, and the government for far too long.
Sen. Elizabeth Warren (D-MA) agreed, saying "If we had class action on this in 2010, 2009, 2008, the problem never would have gotten so out of hand."
Sen. Sherrod Brown (D-OH), Ranking Member of the committee, asked Stumpf if Wells Fargo would continue to deny its victims of their day in court through the use of forced arbitration. Stumpf declined to commit to ending the practice.
The committee also heard testimony from Richard Cordray, Director of the Consumer Financial Protection Bureau (CFPB). The CFPB is in the final stages of promulgating a rule to limit the use of forced arbitration in contracts for certain financial services and products, which would restore the rights of Americans who fall prey to scams like the one perpetrated by Wells Fargo.
“AAJ strongly supports the CFPB’s proposal to restrict the use of forced arbitration,” Ms. Kane said. “The Wells Fargo scandal underscores the need for the Bureau to act quickly to restore the rights of American consumers."
The American Association for Justice works to preserve the constitutional right to trial by jury and to make sure people have a fair chance to receive justice through the legal system when they are injured by the negligence or misconduct of others—even when it means taking on the most powerful corporations. Visit http://www.justice.org.