(Adds comment from Wells Fargo)
By Suzanne Barlyn
NEW YORK Nov 28 Massachusetts Democratic
Senator Elizabeth Warren on Monday criticized Wells Fargo & Co's
decision to require customers affected by its
unauthorized accounts scandal to go through arbitration rather
than allowing them to sue.
The San Francisco-based bank last week asked a U.S. court to
uphold contract clauses that mandate arbitration, something
financial firms often use to protect against litigation. Wells
Fargo's situation is unusual, though, because it opened accounts
without customers' permission, calling into question whether the
contracts and their clauses are legitimate.
In a Facebook post on Monday, Warren, a frequent critic of
the banking industry, said Wells Fargo's promise to treat
customers better in light of the scandal is "meaningless" as
long as it is pursuing arbitration.
"After dozens of Wells Fargo customers sued the bank to
recover fees they were charged from these fake accounts, Wells
Fargo tried to boot the claims from court and into the
closed-door, industry-friendly arbitration process," Warren
"Unfortunately, there's a real chance a court will let Wells
Fargo shuffle these claims off to die in arbitration."
A Wells Fargo spokesman said the bank has an arbitration
clause in its customer account agreements.
"In cases where customers have received a product that they
did not want or authorize related to our recently-announced
settlements, we are providing free mediation through an
impartial third-party," the spokesman said.
Last year, The bank successfully argued in another lawsuit
that arbitration agreements customers signed when opening
legitimate accounts extended to the unauthorized ones.
Warren also used her Facebook post to advocate for a rule
proposed by the Consumer Financial Protection Bureau that would
eliminate mandatory arbitration.
Before being elected to Congress, Warren was a vocal
proponent of such an agency being created as part of the 2010
Dodd-Frank financial reform law. Some Republican lawmakers in
newly powerful positions following the 2016 elections have
pledged to eliminate it.
(Reporting by Suzanne Barlyn in New York; Writing by Lauren
Tara LaCapra; Editing by Alan Crosby and Gopakumar Warrier)