Skeptics Fault Wells Fargo Settlement

Wells Fargo’s recent $110 million settlement, covering a number of lawsuits over its practice of opening new accounts for customers without their knowledge and later hitting many of them with fees, is being criticized on a number of fronts. The Washington Post reports that the settlement lets the bank keep out of court “a high-stakes battle over whether companies should be able to require customers to resolve their disputes through private arbitration rather than by filing a lawsuit.” The agreement in Jabbari et al v. Wells Fargo & Co et al, filed in the U.S. District Court in the Northern District of California, appears to be based on a narrow characterization of damages, reimbursing customers who had accounts opened in their name for “any wrong fees,” according to Reuters. As many as two million customers are said to have had accounts opened in their name without their knowledge. Named plaintiff Jabbari claims that two years after he opened checking and savings accounts at Wells Fargo, he learned that he had seven additional accounts, and he received collection notices for $325 in service fees and $120 in overdraft fees due related to them. While the bank has maintained that Jabbari’s claim should be handled in arbitration, Jabarri says that when he opened his original accounts with Wells Fargo he never imagined he was “agreeing to arbitrate a dispute about accounts that the bank would open without my consent.” Meanwhile, the Los Angeles Times reports widespread discontent from lawyers whose cases against the San Francisco-based bank were swept into the settlement. “Calling the agreement both premature and far too small, these lawyers say they plan to formally object to the settlement and take whatever other actions they can to keep their own cases going,”  the Times writes.