[BreachExchange] Dodd bill protecting victims in wake of Wells Fargo scandal, passes Assembly

[Audrey McNeil]

http://www.timesheraldonline.com/article/NH/20170906/NEWS/170909882

The California State Assembly passed a bill by Senator Bill Dodd (D-Napa)
on Tuesday to protect victims of mass fraud and identity theft in the wake
of the Wells Fargo scandal, Dodd’s office announced.

The bill, co-authored by Assembly member Matt Dababneh (D- Woodland Hills),
was introduced in response to Wells Fargo having been caught creating
millions of fraudulent accounts, opened without consent, using consumer’s
personal information from existing accounts.

This legislation would eliminate the use of forced arbitration clauses in
contracts that were fraudulently created by financial institutions, giving
victims their day in court, Dodd said.

“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,”
Dodd said. “I’ve been the victim of fraud and identity theft myself, so I
know how jarring and difficult it can be, but being victimized by your
once-trusted financial institution has to be even more disturbing. If our
bill were already law, Wells Fargo would have been held publicly
accountable years ago, and the fraud could have been prevented from
spreading.”

With the most recent news uncovering additional fraudulent accounts opened
at Wells Fargo Bank without the knowledge and consent of its customers —
bringing the total since 2009 to over 3.5 million accounts — it is even
more important that openness and accountability is brought to this process
and these customers are provided an way to find justice in our legal
system, Dababneh said.

“When signing up for financial products, consumers should not be forced
into arbitration clauses when the financial institution itself is the one
committing these deceptive acts,” she said. “This bill will put in place a
process to help prevent this kind of fraud and abuse from occurring in the
future.”

Some of the more than two million fake accounts created by Wells Fargo
employees, incurred fees that were charged to the victims, the lawmakers
said. Many of the victims attempted to sue the bank for damages and to
recover their losses, they said, adding that last week, Wells Fargo
admitted the actual number of victims may eclipse 3.5 million, nearly 70
percent more than previously reported.

“Instead of allowing victims to have their day in court, where an
independent judge or jury can arrive at a verdict following an open and
fair trial, Wells Fargo wrongly pushed customers seeking justice into
forced arbitration,” arguing, and backed by the courts, that they had
waived their right to sue when they opened their legitimate accounts,
California State Treasurer John Chiang said. “Senate Bill 33, ... will
level the legal playing field and restore an urgently needed measure of
fairness. I applaud his efforts and am proud of our partnership.”

The only recourse left to victims now is through binding arbitration which
usually tend to favor the defendant as they are able to select the
arbitrator overseeing the case, Chiang said. In the scandal’s aftermath,
Chiang suspended ties between the state of California and Wells Fargo, and
the bank must pay regulatory fines of $185 million for their illegal uses
of consumer information, he said.

Sponsored by Chiang and leading consumer advocacy groups, SB 33, will
prohibit the use of forced arbitration in cases where a financial
institution has wrongfully used consumer information to commit fraud. The
bill now returns to the Senate, where it previously passed, for a
concurrence vote and then to the Governor’s desk.

Similar legislation was introduced in the United States Congress by U.S.
Senator Sherrod Brown (D-Ohio) and Representative Brad Sherman (D-Calif.),
Dodd’s office said.

Dodd represents the 3rd Senate District, which includes all or portions of
Solano, Napa, Sonoma, Yolo, Sacramento, and Contra Costa counties.
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