Justice for Victims of Fraud
We’ve told you before about our opposition to forced arbitration. Now, there’s an opportunity for legislative action to prevent this practice and provide a path to justice for victims of financial fraud.
Americans for Financial Reform released this statement today:
Americans for Financial Reform applauds the Justice for Victims of Fraud Act of 2016, introduced today by Senator Sherrod Brown and Congressman Brad Sherman. The bill would help ensure that banks and lenders cannot cover up certain illegal fraud schemes by forcing consumers into secret arbitration.
Shortly after Wells Fargo was fined for opening 2 million fraudulent bank and credit card accounts without customer consent, reports revealed that customers had been trying to sue the bank over these fraudulent accounts since at least 2013. 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. This practice helped keep Wells Fargo’s massive fraud out of the spotlight for so long.
As demonstrated by Wells Fargo, forced arbitration “ripoff clauses” give the financial industry an effective license to steal and keep misconduct out of the public eye. The Justice for Victims of Fraud Act would restore consumers’ right to hold banks accountable in court when fraudulent accounts are opened without the consumers’ knowledge.
While the Justice for Victims of Fraud Act is crucial to remedying specific past abuses, a rule proposed by the Consumer Financial Protection Bureau (CFPB) – the agency that exposed Wells Fargo – is necessary to prevent future misconduct. The rule would restore customers’ ability to join together to challenge widespread fraud and return transparency to arbitration by creating a public record of claims and outcomes.
Working in conjunction with the CFPB’s forward-looking rule, the Justice for Victims of Fraud Act of 2016 will ensure consumers can defend against widespread financial fraud.
We agree with AFR and Senator Brown.
And here’s the good news: Tennessee’s Sen. Bob Corker serves on the Senate Banking Committee. Contact him today — ask him to support the Justice for Victims of Fraud Act.
For more on economic justice issues in Tennessee, follow @TNCitizenAction