The Justice for Victims of Fraud Act of 2016

Legislation introduced by 2 Democratic lawmakers on Thursday would allow Wells Fargo customers to go to court, instead of industry arbitration, to resolve claims about accounts opened without authorization.  The bill, which faces an uphill battle in Congress, is a challenge to Wells' effort to force plaintiffs in a lawsuit involving unauthorized accounts to resolve claims in closed-door arbitration proceedings.

The Justice for Victims of Fraud Act of 2016, introduced by Senate Banking Committee Ranking Minority Member Sherrod Brown and Representative Brad Sherman, takes aim at mandatory arbitration clauses in Wells Fargo account-opening agreements.

The bill would allow individuals who had accounts opened without permission to sue Wells Fargo in court, even if they signed arbitration agreements for other legitimate Wells Fargo accounts, according to a statement from the lawmakers.

On 11/23, Wells filed a motion in a U.S. District Court in Utah, asking a judge to order plaintiffs suing the bank about the accounts to resolve their disputes in private arbitrations instead of in court. The case was the first class action lawsuit filed against Wells since settling with regulators. Wells Fargo is providing free mediation services to resolve disputes, a spokesman said in a statement.

Last year, a court dismissed an earlier lawsuit against Wells Fargo, saying that customers had signed arbitration clauses when opening legitimate accounts.