As we reported last week, Wells Fargo, you know, everybody’s new favorite bank where employees opened millions of unauthorized accounts in customers’ names and what not, have been trying to scheme their way out of class action lawsuits involving the fake account fiasco by forcing each individual customer into private arbitration (keeping up with their shady motif). A few days ago, however, the judge in one lawsuit put the case on hold until he decides whether or not Wells gets to play this “get out of jail free” card.
The Consumerist reports that a federal court judge in Utah has granted Wells Fargo’s request to press pause on litigating the actual merits of a lawsuit filed by 80 of its customers — and seeking to represent a much larger class of Wells customers.
Like most all large banks, Wells Fargo customer agreements include a mandatory binding arbitration clause which, basically, does two things. A) It prevents the customer from bringing a lawsuit against the bank through the court system. Instead, all disputes are to be settled away from public scrutiny, in a private arbitration hearing. And, B) The clause bars similarly wronged customers from joining together in a class action, even in arbitration.
Because of this, each individual customer must enter into the arbitration process (if applicable). Unfortunately, studies show, time and time again, that very few individuals ever elect to arbitrate a dispute. In fact, most bank customers are not even aware that they are bound by these restrictive rules – until something like this happens and they get slammed with legal jargon.
The Consumerist makes a great point in an article they wrote concerning this, when they say: “Even when consumers are aware of their right to arbitrate, they often elect to not enter into the process, especially when the individual rewards are less than the cost of mounting a case. Whereas in a class action, the total damages for all class members can make it financially feasible to mount the case. Additionally, only a small number of class representatives need to be named in the case; the rest of the class often needs to merely claim their portion of the damages if their side prevails or settles.”
Even though numerous lawmakers and consumer advocates have asked Wells Fargo not to force the members of these class actions out of the courtroom, the bank has asked the court to compel arbitration, of course.
The plaintiffs in this lawsuit have until Dec. 23 to file their opposition to Wells Fargo’s motion to compel arbitration, and then the bank has until Jan. 27, 2017 to respond to the plaintiffs, so the issue of arbitration likely won’t be decided until February.
Wells has already successfully used arbitration to force at least one fake-account class action out of the courtroom. That lawsuit was filed in May 2015 and shunted off to arbitration in Sept. 2015 — a full year before the bank confirmed the widespread bogus account issue in a $185 million settlement with state and federal regulators.
The bank now faces the potential for additional suits after the recent allegations made by former Prudential employees that Wells staff may have fraudulently opened life insurance accounts in customers’ names.
…and so it goes.