By now, most Americans have heard about Wells Fargo’s fake account scandal that led to as many as 3.5 million unauthorized bank accounts (more than 23,000 here in South Carolina) and damaged people’s credit scores across the country. Last week, we learned that Wells Fargo has also been running an auto insurance scam. And now, Congress is bending over backwards to help the banks and other bad actors get away with their crimes.
Wells Fargo has continuously tried to use forced arbitration to block class actions challenging its behavior. These clauses buried in the fine-print of Wells Fargo’s contracts ban individuals and small businesses from banding together in a class and suing in court, instead forcing fraud victims into an individual and secretive arbitration process. Oftentimes, the arbitrator is chosen by the financial institution.
Since 2009, only 215 consumers nationwide have filed claims in arbitration against Wells Fargo, and just one claim has been filed in South Carolina. Most of them ended up paying out money to Wells Fargo. The Economic Policy Institute found that the average consumer pays the bank or lender $7,725 in arbitration.
Fortunately, a new rule from the Consumer Financial Protection Bureau bars financial institutions from banning class-action lawsuits and restores customers’ right to have their day in court when banks or predatory lenders violate the law.
Unfortunately, powerful corporate interest groups such as the U.S. Chamber of Commerce are lobbying lawmakers to repeal the new rule, thereby giving a free pass to institutions such as Wells Fargo.
Last week, the House voted to repeal the rule, and senators plan to use a fast-track process with little debate to repeal it.
Our senators have a chance to put South Carolinians ahead of Wall Street banks by rejecting efforts to overturn the arbitration rule. We can’t afford to lose the power to hold corporate wrongdoers accountable. I hope our senators agree.