In congressional hearing rooms and on national television, Wells Fargo has vowed to make things right for the thousands of customers who were given sham accounts.The bank’s new chief executive, Timothy J. Sloan, in his first week on the job, said his “immediate and highest priority is to restore trust in Wells Fargo.”But in federal and state courtrooms across the country, Wells Fargo is taking a different tack.
The bank has sought to kill lawsuits that its customers have filed over the creation of as many as two million sham accounts by moving the cases into private arbitration — a secretive legal process that often favors corporations.Lawyers for the bank’s customers say the legal motions are an attempt to limit the bank’s accountability for the widespread fraud and deny its customers their day in open court.
“It is ridiculous,” said Jennifer Zeleny, who is suing Wells Fargo in federal court in Utah, along with about 80 other customers, over unauthorized accounts. “This is an issue of identity theft — my identity was used so employees could meet sales goals. This is something that needs to be litigated in a public forum.”In arbitration, consumers often find the odds are stacked against them. The arbitration clauses prevent consumers from banding together to file a lawsuit as a class, forcing them instead to hash out their disputes one by one and blunting one of most powerful tools that Americans have in challenging harmful and deceitful practices by big companies.Strict judicial rules limiting conflicts of interest also do not apply in arbitration, enabling some companies to steer cases to friendly arbitrators, according to a 2015 investigation by The New York Times.Arbitration is also conducted outside public view, and the decisions are nearly impossible to overturn.
Ms. Zeleny, a lawyer who lives outside Salt Lake City and opened a Wells Fargo account when she started a new law practice, said it would be impossible for her to agree to arbitrate her dispute over an account that she had never signed up for in the first place.The bank’s counterargument: The arbitration clauses included in the legitimate contracts customers signed to open bank accounts also cover disputes related to the false ones set up in their names.
Most Americans never bother to take their disputes to arbitration, particularly for a dispute over a small amount of money, the Times investigation showed.And that is likely to be the case for many of the Wells Fargo customers who are sent into arbitration, lawyers say.In many instances, the fees that customers were charged on the unauthorized accounts were less than $100. Few lawyers will take up individual arbitration claims when the potential damages are low.“This is meant to have a chilling effect,” said Zane Christensen, a lawyer who represented customers in a suit against Wells Fargo in federal court in Utah. “They know customers will have a hard time finding a lawyer to represent them in arbitration.”
UPDATE: And the hits just keep on coming. Now the insurance giant Prudential is accusing Wells Fargo executives of opening fraudulent insurance accounts on behalf of its unwitting clients (but only after firing three of its employees who blew the whistle).
According to three former managers in Prudential’s corporate investigation division, Wells Fargo employees appeared to have signed up bank customers for Prudential insurance without the customers’ knowledge or permission. In some cases, they even arranged for monthly premium fees to be withdrawn from their customers’ accounts.Awesome sauce. Next up: Wells Fargo takes out insurance and opens credit card accounts on dead people.
When investigators reviewed tapes of calls to Prudential’s customer service line, they found complaints from Wells Fargo customers about policies they did not remember buying. Many of the customers did not speak English and needed a Spanish interpreter, the three plaintiffs said.“This definitely was the same kind of conduct that Wells was committing, but through Prudential,” said one of the three whistle-blowers, Julie Han Broderick, an attorney and former co-head of Prudential’s corporate investigations division, which has about 30 employees.Ms. Broderick and two of her colleagues, Darron Smith and Thomas Schreck, filed a wrongful termination suit against Prudential on Tuesday. They say they were fired in November for trying to escalate attention internally to their discoveries about conduct at Wells Fargo.