On Monday, Ohio Senator Sherrod Brown announced plans to introduce a bill that would allow customers of Wells Fargo & Co. to sue the company who are currently unable to do so because of contractual arbitration clauses.
Arbitration laws allow companies to contractually prohibit customers and employees from suing them in court, instead requiring all disputes to be handled through arbitration. As a result, many of the two million customers affected by the Wells Fargo fake account scam are unable to sue the company. Fortunately, Brown’s bill will invalidate arbitration clauses used by Wells Fargo and all other US banks and allow their customers to have their claims heard in court.
The issue of arbitration laws is not a new subject, although it has only recently gained political attention. The Consumer Financial Protection Bureau (CFPB) proposed a regulation in May that would restrict the usage of arbitration clauses, and could possibly become law next year. In fact, Presidential Candidate Hillary Clinton has also drawn attention to the issue during a speech last week in Ohio, stating that companies should not have the ability to use “gotcha” clauses in fine print to evade accountability.
Brown described the importance of addressing arbitration laws in Congress, stating “Secret arbitration proceedings allowed Wells Fargo to get away with this fraud for far too long already…. Giving customers back their right to take Wells Fargo to court gives them the power to ensure they are made whole and help prevent cases like this in the future.”
It is important to note that while the CFPB’s regulation will limit the ability of companies to use arbitration clauses, it will not invalidate clauses that are already in use. However, Brown’s bill would allow previously signed contracts containing arbitration clauses to be challenged, even if the account in question wasn’t fake.