Victims of Wells Fargo Fake Accounts Scandal May Soon Obtain Relief
Last fall, Wells Fargo became Public Enemy No. 1 in the eyes of millions of Americans when it was revealed that the bank opened fake deposit and credit card accounts in its customers’ names without their knowledge or consent and charged those customers unwanted fees. At that time, this blog commented on the scandal and the fact that Wells Fargo was attempting to pour salt in the wounds of its customers by forcing them out of court and into arbitration where the bank could avoid dealing with them collectively.
Subsequently, Wells Fargo paid $185 million to federal and California authorities, fired several executives and thousands of bank employees who opened the fake accounts, and the bank’s CEO resigned. But what about the real victims—the bank’s customers?
Last week, Wells Fargo announced that it will pay $110 million to settle a class action lawsuit filed on behalf of the harmed customers. The settlement, which is subject to court approval, will first cover any customers’ out-of-pocket losses or fees they incurred due to the fake accounts, and any remaining money will be split among the harmed customers. Wells Fargo expects the settlement to resolve claims in 11 other pending class actions. As far as attempting to force its customers out of court and into arbitration, Wells Fargo noted that the two sides in the lawsuit disputed the applicability of the arbitration agreement in the bank’s deposit agreements, and Wells Fargo agreed to the settlement notwithstanding the arbitration issue.
Although some credit is owed to Wells Fargo and its new CEO for taking action to make things right with its customers following the scandal, the filing of class action lawsuits against the bank cannot be discounted. Without such lawsuits and their challenges to Wells Fargo’s attempts to force its customers into individual arbitrations, the harmed customers likely would not have been able obtain collective relief or at the very least would have had to wait much longer to obtain it. The settlement of this class action highlights how such lawsuits help to remedy small dollar harms committed against a large amount of victims. When numerous victims can collectively pursue relief, rather than individually, wrongdoers can better be held accountable for their actions. That is one reason why Wexler Wallace LLP is so passionate about its work.
Photo Credit: Mike Mozart