| NEW YORK
NEW YORK Nov 24 Wells Fargo & Co has
asked a U.S. court to order dozens of customers who are suing
the bank over the opening of unauthorized accounts to resolve
their disputes in private arbitrations instead of court,
according to legal documents.
The motion, filed in the U.S. District Court in Utah on
Wednesday, is in response to the first class action lawsuit
filed against Wells since it agreed to pay $185 million in
penalties and $5 million to customers for opening up to 2
million deposit and credit-card accounts in their names without
The scandal has shaken Wells, the third-largest U.S. bank by
assets. Its former Chief Executive Officer John Stumpf stepped
down amid the furor, it has been put under tougher regulatory
scrutiny and its reputation has been damaged as it faces
The move to enforce the mandatory arbitration clauses comes
as Wells Fargo has launched an advertising campaign to win back
customer loyalty in the wake of the scandal.
No one from Wells Fargo was immediately available to comment
on the filing.
In a written response to questions from U.S. lawmakers,
published last week, the bank said it would stand by its
arbitration policy but was offering free mediation services to
Mandatory arbitration rules inserted into account-opening
agreements prohibit customers from joining class actions or
suing Wells Fargo. Instead, the agreements require individual,
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.
Last year, a court dismissed an earlier lawsuit against
Wells Fargo, saying that customers had signed arbitration
clauses when opening their accounts.
The bank has come under fire over its mandatory arbitration
clauses from Democratic lawmakers in Congress, including Senator
Elizabeth Warren of Massachusetts.
The Consumer Financial Protection Bureau, a brainchild of
Warren, is considering rules to ban banks, credit card issuers
and other companies from forcing customers to submit to
arbitration and waive their right to join class action lawsuits.
But the CFPB could find its powers scaled back by
President-elect Donald Trump and a Republican-led Congress,
according to members of both political parties, lobbyists and
(Editing by Carmel Crimmins and Lisa Shumaker)