![]() Another customer in the class action, Kaylee Heffelfinger, claimed that Wells Fargo opened two accounts in her name in January 2012, weeks before she opened legitimate accounts in March 2012.The bank claimed that these customers “agreed” to arbitrate everything because the fake accounts “could not have been opened had not opened the legitimate accounts which he admits to opening.” Therefore, even completely unauthorized accounts could not escape the “expansive terms of the arbitration agreements.” Wells Fargo invoked its newly-added arbitration clause to dismiss the complaint, arguing that disputes, including any dispute over whether the clauses applied at all, must be decided by a private arbitrator hired by the bank.By June 2011, five more accounts were opened for Jabbari without his knowledge or consent. By April 2011, two additional accounts were opened in his name, with $100 transferred to each from his savings account. Shariar Jabbari opened two accounts in January 2011.In 2015, Wells Fargo vigorously denied the allegations, describing its culture as “focused on the best interests of its customers and creating a supportive, caring, and ethical environment for our team members.” Since this practice was so widespread, the consumers filed their suit on behalf of all consumers subjected to this conduct. The lawsuit specifically alleged the existence of a corporate policy compensating employees based on the number of accounts opened. Cal.)Ĭonsumers filed a lawsuit against Wells Fargo claiming that the bank unlawfully opened a series of accounts in their names and then charged fees in connection with those unauthorized accounts. Shariar Jabbari & Kaylee Heffelfinger et al. This practice helped keep Wells Fargo’s massive fraud out of the spotlight for so long. However, the bank forced those customers into secret, binding arbitration by invoking fine print in consumers’ legitimate account agreements to block them from suing over fake accounts. According to the CFPB, its “investigation found that since at least 2011, thousands of Wells Fargo employees took part in these illegal acts to enrich themselves by enrolling consumers in a variety of products and services without their knowledge or consent.” In February 2012, Wells Fargo started using forced arbitration clauses in all of its customer checking and savings account agreements, shortly after evidence began emerging that it was defrauding its customers.Ĭustomers have been trying to sue Wells Fargo over fraudulent accounts since at least 2013. raymondclarkeimages on flickr.Īt least 3,500 Wells Fargo employees opened approximately 1.5 million bank accounts and approximately 565,000 credit cards without the consent of their customers. Since May, more than 100,000 individual consumers and 281 consumer, civil rights, labor, and small business groups wrote in to support the proposed rule. The CFPB is in the midst of a rulemaking that would restore consumers’ right to join together to hold banks accountable for predatory behavior like the Wells Fargo scandal. ![]() Buried in the fine print, “ripoff clauses” force consumer and worker claims into arbitration – a secretive, rigged system where the corporation gets to pick the arbitration provider and which rules will apply – and bars people harmed in similar ways from joining together in class actions to challenge systemic abuses.īecause agencies have limited resources, individual and class action lawsuits brought by consumers and workers often act as the canary in the coal mine to alert agencies to fraud and abuse. ![]() Since federal agencies announced their $185 million enforcement action against Wells Fargo for widespread fraud, there has been renewed focus on the bank’s use of forced arbitration.įorced arbitration is a relatively new phenomenon designed to allow corporations to keep misconduct out of public view, evade the law, and escape accountability.
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