Even though disgraced Wells Fargo CEO John Stumpf has left the building, his most outrageous legal theories live on: on Wednesday, the company filed a motion in a federal court in Utah seeking dismissal of a class action suit by the customers it defrauded — the bank argues that since customers sign a binding arbitration "agreement" when they open new accounts, that the customers whose signatures were forged on fraudulent new accounts should be subject to this agreement and denied a day in court.
This is the same argument that Stumpf made during his disastrous performance in front of a blazing Elizabeth Warren — that Wells's poor customers should be subjected to agreements they never made, because Wells stole their identities and "agreed" on their behalf.
Mandatory arbitration rules inserted into account-opening agreements prohibit customers from joining class actions or suing Wells Fargo. Instead, the agreements require individual, closed-door arbitration.
Mandating arbitration when signing up for financial products has become standard practice after a 2011 U.S. Supreme Court decision validated the practice. But customer advocates say it improperly denies customers the legal protections of court proceedings, such as the right to appeal, and helps to conceal corporate misconduct from the public and regulators because documents and hearings are not made public.
Customers trying to recover small sums of money are also unlikely to find lawyers to represent them in arbitration, critics say, and the cases do not set a legal precedent to help other affected individuals.
Wells Fargo asks U.S. court to dismiss account scandal lawsuit