Brown Says Wells Fargo Has Not Done Enough to Earn Back Customer Trust

U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – demanded answers from Wells Fargo CEO Timothy Sloan today about the company’s failure to detect millions of fraudulent accounts opened in customers’ names, as well as the company’s practice of forcing unwanted insurance on auto loan borrowers.

Brown cited multiple examples that demonstrate Wells Fargo has failed to institute significant changes in order to earn back customer trust. Wells Fargo only recently disclosed that the number of fraudulent accounts was 70 percent higher than it originally reported. And, while Wells Fargo told Congress the problems were limited to its community bank, the auto loan division stuck 800,000 customers with auto insurance policies without the customers’ consent.

Brown pressed Sloan on Wells Fargo’s use of so-called forced arbitration clauses to block customers from seeking justice in the court system. While Wells Fargo has insisted it is no longer using forced arbitration clauses to cover fake accounts, Brown pointed to a case in Utah within the last three weeks.

Brown pointed out that forced arbitration favors banks, putting customers at a disadvantage when seeking justice. In fact, despite the fact that Wells Fargo opened 3.5 million fraudulent accounts between 2009 and 2017, the bank was awarded more money through arbitration than it was required to pay to customers during that time, according to publicly available data. The average customer involved in an arbitration case with Wells Fargo ended up being ordered to pay the bank $11,000.

Brown also said that because the arbitration proceedings are private, they allow fraud that may have otherwise been brought to light through the court system to continue in secret.

“Forced arbitration always gives the advantage to the bank, and you are continuing to use forced arbitration to take advantage of your customers. Why should we believe you are committed to changing your practices and being fair to customers when you continue to use closed-door arbitration practices that deny customers their day in court?” Brown questioned Sloan.

As the CEO side-stepped Brown’s question, the Senator interrupted, “Give customers their day in court.”

Click here for production-quality video of Brown’s questions.

Brown is leading legislation in the Senate that would give defrauded Wells Fargo customers their day in court. Brown has also championed a rule from the Consumer Financial Protection Bureau that would bar banks, payday lenders and other financial institutions from using forced arbitration to block customers from accessing the court system. In July, the House of Representatives voted to overturn the Consumer Financial Protection Bureau’s rule. Brown vowed a ‘hell of a fight’ against Congressional efforts to roll back the rule.