Sherman and Brown Introduce Bill to Provide Justice to Wells Fargo Victims
Legislation Allows Cheated Customers Their Day in Court
Sherman Oaks, CA – Today, Congressman Brad Sherman (D- Sherman Oaks) and Senator Sherrod Brown (D-Ohio) introduced the Justice for Victims of Fraud Act of 2016. The bill will close a Wells Fargo forced arbitration loophole by preventing Wells Fargo from applying its mandatory arbitration clauses to the millions of fake accounts created without customer consent.
“If a customer never authorized the opening of a credit card or checking account, that same customer should not be bound by an arbitration agreement for a separate, legitimate account,” said Sherman. “Cheated customers should have the choice to opt out of phony contractual arbitration provisions and seek justice in court.”
The bill also clarifies that a judge should make a decision in public about whether an account was fraudulently opened, rather than a determination being made by an arbitration panel behind closed doors.
“Forced arbitration is shielding Wells Fargo from being held accountable for tanking customers’ credit scores and charging them fraudulent fines,” said Brown. “Wells Fargo’s customers never intended to sign away their right to fight back against fraud and deceit. We need to give customers back their ability to seek justice in court so they can be made whole again.”
Sherman is a senior member of the Financial Services Committee. He questioned former Chairman and CEO of Wells Fargo John Stumpf in a Committee Hearing on September 29, 2016 about whether the bank will apply its mandatory arbitration clauses intended for real accounts to the fraudulent accounts.
“The cheated Wells Fargo customers deserve their day in court. Are you going to hold them to these forced arbitration clauses and screw them again out of their day in court, or are you willing to waive those clauses and say if you're caught up in this, you get your choice whether you have arbitration or not?” asked Sherman.
In his response, Stumpf refused to waive forced arbitration for the victims.
Sherman has also called attention to Wells Fargo’s deception. He documented how Stumpf bragged about the bank’s credit card cross penetration rates to shareholders well after the firing of thousands of employees for falsifying accounts.
“Wells Fargo took 5,300 good Americans and turned them into felons with a system that its executives created and benefited from,” said Sherman.
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.
In introducing the Justice for Victims of Fraud Act of 2016, Sherman and Brown were joined by Representatives Conyers (Ranking Member of the Judiciary Committee), Capuano, Cartwright, Chu, Danny Davis, Edwards, Grijalva, Lawrence, Napolitano, and Norton and Senators Leahy, Franken, Durbin, Tester, Murray, Merkley, Warren, Hirono, Casey, Warner, Menendez, Blumenthal, Heitkamp, and Reed.
Sherman has been a longtime advocate of breaking up the big banks. He introduced the Too Big to Fail, Too Big to Exist Act with Senator Bernie Sanders.
“Wells Fargo’s deceptive and fraudulent practices demonstrate that it’s too big to fail, too big to manage, too big to regulate, and too big to exist. It’s time to break these giant banks up,” said Sherman.