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New~Senator Bill Dodd’s bank fraud bill clears California Senate

2017-06-03 15:55 [BANK] Source:Netword
Guide:Sign up for a bank account and you sign away your right

New~Senator Bill Dodd’s bank fraud bill clears California Senate

New~Senator Bill Dodd’s bank fraud bill clears California Senate

(2 of ) Bill Dodd

New~Senator Bill Dodd’s bank fraud bill clears California Senate

(3 of ) Sen. Bill Dodd, D-American Canyon

Senator Bill Dodd’s bank fraud bill clears California Senate


THE PRESS DEMOCRAT | June 2, 2017, 3:31PM

| Updated 1 hour ago.

Sign up for a bank account and you sign away your right to sue the institution if it uses your personal financial information to commit fraud.

And that’s just not right, state Sen. Bill Dodd says.

Inspired by the Wells Fargo & Co. banking scandal, Dodd, a Napa Democrat, has co-authored legislation that would nullify arbitration agreements to settle disputes arising from the misuse of customer details and allow differences to be aired in public courts.

Already, his idea has gained traction. It passed the Senate on Tuesday and is expected to be heard in an Assembly committee next week.

It could be on Gov. Jerry Brown’s desk later this summer.

“My bill will bring justice for victims of bank fraud and help prevent future fraud, before it spreads,” Dodd said. “The idea that consumers can be blocked from our public courts when their bank commits fraud and identity theft against them is un-American.”

One of the biggest consumer scandals in banking history unfolded in September when it was revealed Wells Fargo officials used customer information to open an estimated 2.1 million bogus accounts in an apparent effort to meet unrealistic sales goals.

Investigators revealed the bank went to great lengths, preying on unwitting seniors and students. In Petaluma, bank employees rounded up day laborers congregating outside a convenience store and signed them up for accounts.

In response, the San Francisco-based banking giant fired 5,300 employees, clawed back executive bonuses and paid $185 million in regulatory fines.

Shareholders filed suits but not actual customers, in part because of fine-print agreements requiring disputes be handled by private arbitration. Arbitration cases tend to favor corporate defendants because they get to select and pay for the service, Dodd said.

“Many of the victims attempted to sue the bank for damages and to recover their losses,” he said. “However, Wells Fargo successfully argued that their customers waived their right to sue when they opened their original, legitimate accounts, which were the source of the personal information used to create the fraudulent accounts.”

Under Dodd’s bill, SB33, bank customers would no longer be forced into arbitration. Such agreements would become void when financial institutions were found to have wrongfully used consumer information to commit fraud. Instead, claims would be resolved in open court, bringing a new level of fairness and transparency, Dodd said.

“Had my bill been in place at the time of this scandal it would not have been anywhere near as big,” Dodd said. “All the claims were being hidden behind closed doors in arbitration and not (heard) in a court of law.”

The bill is opposed by the banking industry and the state Chamber of Commerce, which has dismissed it as a job-killing bill. But Dodd said his bill could prevent future scandals, which would have far worse effects on the workforce.

“With Wells Fargo, 5,300 rank and file bank employees lost their jobs,” Dodd said. “They created the job killing themselves.”

You can reach Staff Writer Paul Payne at 707-568-5312 or [email protected]

NewProfessional financial


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