New law torpedoes some bank arbitration clauses

October 4, 2017 9:05pm

•  Prompted by the Wells Fargo frauds

•  “California has leveled the playing field”

California has a new law that frees bank customers, who filed claims for damages, from being forced by their bank into closed-door, often-biased arbitration proceedings.

The new law, authored by state Sen. Bill Dodd, D-Napa and sponsored by state Treasurer John Chiang and consumer advocates, was prompted by the fraud by Wells Fargo Bank and other institutions.

“Wells Fargo opened phony accounts for 3.5 million customers and then rubbed salt in the wounds of its victims by wrongly forcing them into arbitration,” says Mr. Chiang. “California has leveled the playing field and restored an urgently needed measure of fairness by giving victims the opportunity to plead their cases before judges and juries.”

"Ensuring victims have access to our public courts helps them recover and can stop illegal business practices," says Mr. Dodd. "The idea that consumers can be blocked from our public courts when their bank commits fraud and identity theft against them is simply un-American.”

The governor’s signing of the legislation coincides with the one-year anniversary of sanctions against Wells Fargo Bank issued by Mr. Chiang.

A decision as to whether the sanctions are lifted, extended or modified is pending a review of actions Wells Fargo has taken over the past year to make its customers whole and to cure its corporate culture of callousness toward customers.

Copyright ©2017 Central Valley Business Times
No content may be reused without written permission.
An online unit of BizGnus, Inc.
All rights reserved.