washington<u+2014>sen. sherrod brown (d., ohio) said<u+00a0>monday<u+00a0>he plans to introduce a bill to prevent wells fargo & co. from invoking forced arbitration clauses<u+00a0>in contracts with customers<u+00a0>following the scandal involving unauthorized accounts. that step would make it easier for customers to sue the bank for any damages they<u+00a0>incurred when bank employees opened as many as two million accounts in customers<u+2019> names without their consent. some lawmakers, including mr. brown, have criticized wells fargo for using legal agreements buried within contracts. the bank can block customers from filing lawsuits for damages incurred by unauthorized accounts, including negative effects on the customers<u+2019> credit scores and borrowing costs. such <u+201c>mandatory arbitration<u+201d> clauses are controversial but commonly used for financial products and services like bank accounts and credit cards. they are<u+00a0>used to force customers into private arbitration when disputes arise, cutting off their ability to file lawsuits that can be certified as class action. <u+201c>giving customers back their right to take wells fargo to court gives them the power to ensure they are made whole and helps prevent cases like this in the future,<u+201d> mr. brown said in a press release. he added that he planned to introduce the legislation when congress returns from the current recess after the november election. the trajectory of the bill will be tied closely to the outcome of the elections. the bill would get stronger support if the democrats regain a majority in the senate. that would also increase the influence of mr. brown, who would then likely head the senate banking committee. hillary clinton also stepped up her criticism of wells fargo and arbitration clauses. <u+201c>we can<u+2019>t let companies like wells fargo use these fine print gotchas to escape accountability,<u+201d> the democratic presidential candidate said<u+00a0>monday<u+00a0>in a campaign stop in toledo, ohio. customers, she said, <u+201c>are forced into a closed-door arbitration process without the important protections you get in a court of law.<u+201d> at a house panel hearing on sept. 29, wells fargo chief executive john stumpf defended the bank<u+2019>s use of arbitration clauses, saying it is a <u+201c>fair way<u+201d> to<u+00a0>compensate customers for financial damages, and that the bank is paying for mediators for customers who choose to seek arbitration. the scrutiny over the use mandatory arbitration at wells fargo comes as regulators and industry battle over the cost and benefit of such practices. the consumer financial protection bureau, which along with other regulators hit wells fargo with a $185 million fine for opening nearly two million bank and credit-card accounts without customer consent, proposed a new rule in may banning the use of arbitration clauses in financial products as a way to block class-action lawsuits. the department of health and human services in august issued a new rule that will prohibit certain long-term care facilities from forcing residents into arbitration. supporters<u+00a0>of new restrictions on arbitration rules<u+00a0>say they will<u+00a0>discourage companies from practices that harm customers. opponents say arbitration is an easier and cheaper method for customers to resolve disputes, and that new rules would only enrich class-action lawyers. write to yuka hayashi at yuka.hayashi@wsj.com
sen. brown<u+00a0>plans bill to ban forced arbitration in wells fargo sales scandal    - wsj
yuka hayashi