If banks like Wells Fargo were able to take advantage of its consumers to the tune of millions of dollars by creating fake accounts and charging fees without the consent of its customers under the democratic administration of President Barack Obama, think about how much worse it could have been under the republican President-elect Donald Trump.
One of the president-elect’s many promises is to get rid of the Dodd-Frank Wall Street Reform and Consumer Protection Act.54 which of course protects the little guy from the very same banks’ practices that got us into the 2008 financial crisis and resulting recession.
One of the anti-consumer practices by banks is to have the account holders sign an agreement where the consumer are bound to settle disputes via arbitration. This clause is somewhere in the fine print. Then the arbiters are compensated by the banks which means their allegiance and bias are with the financial institutions which pay their fees.
This appears to be perfectly legal. This is how Wells Fargo is limiting its costs to settle the many suits by consumers who have been wronged against the bank.
The 12/26/16 Philly.com opinion piece, “Inquirer Editorial: Wells Fargo puts profits before customers,” details how the arbitration clause is used by banks:
“It was bad enough when Wells Fargo ripped off thousands of its own clients by creating fake email accounts to sign up customers for online banking services and issuing credit cards without their consent. But rather than settle the disputes in open court, the bank has been moving to push cases into private arbitration – a legal process that usually favors corporations.”
“In September, Wells Fargo agreed to pay $185 million in fines and refund $2.6 million in fees charged to customers. The bank apologized and said it was taking “responsibility for any instances where customers may have received a product that they did not request.”
“But Wells Fargo’s actions speak louder than its words. In courtrooms across the country, the bank has moved to have cases go to arbitration. Attorneys for customers say the bank’s efforts are designed to limit accountability for the rampant fraud and deny individuals their day in open court.”
“Then again, this is not Wells Fargo’s first brush with the law. Consider some of the other legal troubles that have ensnared Wells Fargo this year alone:”
“In February, Wells Fargo Bank agreed to pay $1.2 billion to settle claims that it made reckless loans leading up to the housing bubble and then illegally claimed certain loans were eligible for a federal insurance program.”
“In March, the Securities and Exchange Commission charged the bank with defrauding investors in a municipal bond deal to finance 38 Studios, a Rhode Island startup video game company founded by former Boston Red Sox and Phillies pitcher Curt Schilling that eventually went bankrupt, leaving the state on the hook for $75 million in debt.”
“In August, Wells Fargo agreed to pay $3.6 million, plus $410,000 in restitution to customers to settle allegations that it engaged in illegal student loan servicing practices.”
“The bank’s history is dotted with numerous other fines paid to settle various schemes over the years. Each time, Wells Fargo usually issues the requisite apology or underscores how much it values its customers. But it is getting hard to trust the bank’s promises.”
“After Wells Fargo agreed to pay $185 million in fines in September, the bank issued a statement that said it was “committed to put our customers’ interests first 100 percent of the time.” Shortly after the statement was released, Wells Fargo began pushing customers’ claims into arbitration.”
“Two recent Supreme Court rulings paved the way for the widespread use of arbitration clauses, which are usually buried in fine print. Many companies use the clauses as a way to resolve disputes and prohibit customers from joining class-action lawsuits. Companies have also been known to steer cases to friendly arbitrators. In the case of Wells Fargo, it is hard to argue that customers agreed to arbitration for accounts or credit cards that they did not initiate. But the courts have been ruling in favor of the bank.” Senator Sherrod brown (D., Ohio) and Rep. Brad Sherman (D., Calif.), introduced a bill this month that would prevent Wells Fargo from forcing customers suing over the phony accounts to go to arbitration. Passage is unlikely, but the bank could resolve the problem by putting customers before profits.”