Wells Fargo’s False Promises
Forced arbitration. Bad for consumers, great for banks and other big businesses. Wells Fargo forced customers into forced arbitration, attempting to prevent class action suits and mitigate the impact of other legal claims against the scandal-ridden big bank.
The L.A. Times reports:
We’ve pointed out before that big companies like Wells Fargo love to force customers into arbitration because the companies are heavily favored in the process. They’re repeat players, so they have familiarity with the system. They can stick customers with half the cost of arbitration, even if the customers win, increasing the customers’ risk. And they can bar customers from filing class actions, which for a corporation is a big plus.
Who wins in forced arbitration? Wells Fargo. The loser: Consumers.
The L.A. Times story cites a study noting:
Those figures reflect the “improbable chance that consumers will be compensated wholly or at all” in arbitration, says Matthew Waldron of UC’s Hastings School of Law, who has analyzed statistics of arbitration cases involving Wells Fargo and other banks. The Level Playing Field report notes that plaintiffs prevail in more than 60% in state court contract cases that go to trial, but won only 35% in the Wells Fargo cases — seven out of 20 — in which the victor was identified in the arbitration record. Wells Fargo declined to comment on the report.
Forced arbitration means Wells Fargo and other big corporations win at the expense of consumers. Car dealers, banks, and payday lenders are among those who include forced arbitration provisions in their standard contracts.
Here’s how Wells Fargo is currently handling the settlement of complaints:
The results shed additional light on the bank’s approach to making up for its scandal, in which retail bankers met crushing sales quotas by opening as many as 2 million bogus checking and credit card accounts in the names of bank customers. Wells Fargo settled charges from federal and state regulators last year for $185 million and thus far has refunded $3.2 million for 130,000 presumably fake accounts. That averages out to $24.61 per account, so you’re welcome to judge whether it’s enough to “make things right.”
So: A warning to consumers doing business — avoid forced arbitration when you can. Ask about it in contracts to buy a car or open a bank account. And ask if an alternative is available. Where possible, take your business to someone who won’t push you into a forced arbitration clause for settling disputes.
For more on consumer protection issues, follow @TNCitizenAction
Your support of $5 or $10 keeps us fighting for Tennessee consumers!