CAOC-Backed SB 33 Signed to Prevent Another Wells Fargo-Sized Scandal
On Wednesday, October 4, Governor Jerry Brown signed landmark legislation Senate Bill 33, introduced by Senator Bill Dodd (D-Napa) and co-sponsored by the Consumer Attorneys of California (CAOC). The bill will go into effect Jan. 1, 2018 and will prevent another Wells Fargo-sized scandal by allowing consumers to fight financial institutions in court instead of through secretive arbitration in cases involving bank fraud.
Wells Fargo created at least 3.5 million fraudulent bank accounts and credit cards in order to meet company sales goals. This ultimately damaged credit ratings for many consumers – many of whom have been trying to sue the institution since 2013. Many of the consumers Wells Fargo had targeted were customers with legitimate accounts, and the bank signed them up for new credit cards and accounts without their authorization or knowledge.
Wells Fargo, like many corporations, had broad arbitration clauses in fine print and forced customers that had disputed these unauthorized accounts to resolve in secret arbitration meetings, by allowing the bank to evade full accountability even as more customers were affected.
SB 33 will enable for victims to sue in California state courts by restricting arbitration agreements from applying when financial institutions engage in fraud against their customers. This bill makes it clear that an attempt to hide bank fraud in secretive arbitration will not be tolerated in California.