Wells Fargo seeks arbitration order in customer lawsuit


Wells Fargo seeks arbitration order in customer lawsuit

In the past year, several proposed class actions have targeted financial companies that include in-house investment products in their 401 (k) plans.

Despite this, assets allegedly grew in part because Wells Fargo made its target date funds a default investment option, and provided an "easy" and "quick" enrollment feature.

Reuters reports the proposed class-action lawsuit, filed on Tuesday in federal court in Minnesota, accused the third-largest USA bank of steering 401 (k) contributions to its Wells Fargo Dow Jones Target Date funds.

The move to enforce the mandatory arbitration clauses comes as Wells Fargo has launched an advertising campaign to win back customer loyalty in the wake of the scandal.

Last year, a court dismissed an earlier lawsuit against Wells Fargo, saying that customers had signed arbitration clauses when opening their accounts. The overwhelming majority of those victims were already customers of the bank, which means they may have signed away their right to join class action lawsuits.

Wells Fargo workers would have earned an additional $323 million in returns if the company had offered Vanguard funds instead, according to the lawsuit.

Still, angry politicians have asked Wells Fargo to waive this arbitration clause for customers claiming to have been hurt by the fake accounts. The bank's CEO John Stumpf stepped down shortly after the incident, but he said the decision was not related.

This lawsuit, filed November 22 in a Minnesota federal court, accuses Wells Fargo of intentionally boosting the 401 (k) assets invested in the company's own target date funds by defaulting participant contributions into those funds through a "quick" and "easy" enrollment process. The ad pledged, "Wells Fargo is making changes to make things right".

Customers trying to recover small sums of money are also unlikely to find lawyers to represent them in arbitration, critics say, and the cases do not set a legal precedent to help other affected individuals.

"Wells Fargo isn't concerned about making things right with their customers".

The bank said it's offering "fast and free" mediation to customers through an impartial third party. "Wells Fargo is anxious about making things right in public relations", Christensen said. Hillary Clinton said, "We can't let corporations like Wells Fargo use these fine print "gotchas" to escape accountability".