U.S. Sen. Mark R. Warner (D-VA), a member of the Senate Banking Committee, introduced legislation to give Wells Fargo customers who were victims of a fraudulent account scheme their day in court. The bank was involved in a scandal this year after it was revealed that Wells Fargo employees secretly opened roughly 1.5 million bank accounts and issued 565,000 credit cards without customers’ consent. 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 should not be able to take advantage of arbitration agreements customers signed when they opened legitimate accounts in order to avoid answering for the fakes ones bank employees created without customers’ knowledge,” said Warner. “Consumers who were defrauded by Wells Fargo in one of the most outrageous examples of misconduct since the financial crisis deserve their day in court.”
The Justice for Victims of Fraud Act of 2016 will work hand-in-hand with a new oversight rule that the Consumer Financial Protection Bureau 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 has been endorsed by The American Association for Justice, Consumers Union, the National Association of Consumer Advocates, the National Consumer Law Center (on behalf of its low-income clients), Americans for Financial Reform, the Center for Responsible Lending, the National Association for the Advancement of Colored People (NAACP), Media Voices for Children, Allied Progress, the Woodstock Institute, the Franciscan Action Network, the Economic Policy Institute Center, California Reinvestment Coalition, Consumers for Auto Reliability and Safety, National Consumers League, and Public Justice.
Other bill sponsors are U.S. Sens. Sherrod Brown (D-OH), Patrick Leahy (D-VT), Patty Murray (D-WA), Richard Durbin (D-IL), Jack Reed (D-RI), Robert Menendez (D-NJ), Robert Casey (D-PA), Jon Tester (D-MT), Jeff Merkley (D-OR), Al Franken (D-MN), Richard Blumenthal (CT), Mazie Hirono (D-HI), Elizabeth Warren (D-MA), and Heidi Heitkamp (D-ND).
Sen. Warner has been a strong proponent of consumer protections in the banking industry, previously urging the CFPB to require banks to offer better consumer protections for prepaid card users, including formerly incarcerated individuals who are provided prepaid cards with the money they earned or saved upon their release.