
Wells Fargo says customers gave up right to sue by having signatures forged - petethomas
http://boingboing.net/2016/11/25/wells-fargo-says-that-its-cust.html
======
t0mas88
In the Netherlands a bank got destroyed a few years ago by a single person
starting a media campaign for a bank-run. This was done in response to "shady
practices" on the mortgage side of the bank.

He got people to withdraw over 600 million from DSB Bank in a few days, which
caused the bank to run out of liquidity and forced them to freeze accounts.
This meant they lost all trust in the market and needed to ask other banks for
emergency financing. All other banks declined (with good reasons, a bank
falling apart combined with pending legal action on the mortgage side is a
very high risk for them to take).

So within three weeks DSB was bankrupt. More here:
[https://en.wikipedia.org/wiki/DSB_Bank](https://en.wikipedia.org/wiki/DSB_Bank)

I can imaging some disgruntled customers going after Wells Fargo in the same
way. They have severe legal action pending (which makes them risky for others
to save) and have destroyed their image by their reactions to this (which
makes it easier to motivate customers to take action). All ingredients that
killed DSB are there... The only difference is that DSB was one of the smaller
banks and Wells Fargo is huge.

~~~
gaius
_In the Netherlands a bank got destroyed a few years ago by a single person
starting a media campaign for a bank-run. This was done in response to "shady
practices" on the mortgage side of the bank_

Happened here in the UK too. Northern Rock was in trouble but companies get in
trouble all the time; what killed it and precipitated a full-blown financial
crisis here was certain journalists revelling in the downfall of capitalism
from the safety of their state-broadcaster sinecures...

~~~
_ak
Them going bust is actually a pillar of capitalism. This whole "too big to
fail" bullshit coming from business-friendly politicians was just skewing the
free market.

~~~
tdb7893
Weren't they actually too big to fail, though? I thought that multiple huge
American banks failing would've made the recession a ton worse because banks
would've failed and some large companies wouldn't have been able to make
payroll and it all could've snowballed

~~~
rwmj
The trick is to let them fail, then _rapidly_ sift through the pieces and sell
anything off which still has value. Even failing banks have plenty of good
loans.

Ordinary deposits with banks should be protected by the government because the
general public cannot evaluate the risk of a bank collapsing. There's probably
a case for some protection for companies that hold accounts -- although
companies should really be aware that by depositing money in a bank, they
become lenders to the bank, and they should have the skills to mitigate that
risk. Perhaps smaller companies, and accounts specifically holding payroll,
should receive greater deposit protection.

~~~
tdb7893
That makes sense. If the government were able to do all of that super fast it
might be been fine. I just don't get all of the hate for the bailouts. I know
it feel's like to many people the banks sort of "got away with it" but the
bailout both stopped any bad effects from failed banks and the government made
money off of it so it seems like a win-win for society in my perspective

~~~
caseysoftware
If it's a win-win, then it should be okay - even good! - for the
banks+government to do it again. After all, everyone made money and the
economy only _almost_ collapsed, not actually.

Regardless of the actual dollar amounts changed hands, what the US Federal
government demonstrated was that risky - even illegal - behavior will be
covered and some losses will be covered. It means that next time (and there
will be one), we should assume the risks and losses will be even bigger.

~~~
tdb7893
But the current system was insufficient to stop the previous failure, too.
Wouldn't bailing them out short term and then adding some regulation long term
be a sufficient solution?

~~~
TheSpiceIsLife
If the global financial system was built on a blockchain, couldn't we just
fork and rollback the bad transactions?

But more seriously, why did the resolution have to be a _bailout_. Could
someone with the authority, and here I mean The Government, because they've
got the guns, just tell the banks to rollback the wonky transactions?

------
techsupporter
The Boing Boing article basically quotes this Reuters article, so I think the
Reuters one should be the one linked as it is the source and is more in-depth:

[http://www.reuters.com/article/us-wellsfargo-accounts-
lawsui...](http://www.reuters.com/article/us-wellsfargo-accounts-lawsuit-
idUSKBN13J1WX)

------
kutkloon7
The article is wrong. Wells fargo says customers gave up their right to sue by
signing up for an account, which is far more defendable from a legal point of
view.

Unfortunately, this is common practice and it also shows one of the biggest
problems of the western world. It is quite profitable for a company to screw
over customers. Just discourage them as much as possible to go to court by
letting them sign a large page of legal gibberish, and don't screw them over
too much, and the company will probably be fine.

~~~
CWuestefeld
I think the article is opaque on the terms of that waiver. W-F seems to be
taking the stance that the signature applies to the entirety of the customer's
relationship with the bank - sign this once for any account, and it applies to
actions across all your accounts.

BoingBoing and others are taking the position that the waiver only applies to
actions relating to the specific account that was signed for, each account
standing separately.

The latter approach seems more sensible to me, but really it all comes down to
the language of the statement that they (really) signed, and how courts have
chosen to interpret that.

------
slededit
Despite the histrionics of this article, its actually an interesting question
from a legal perspective. In the case of an account the customer never agreed
to open - are they bound by the agreement which opened their primary account,
or is there no legal agreement in place?

Assuming the original arbitration clause covered the entire business
relationship - not just matters specific to the account opened at signing then
it ultimately is a question of whether the fraudulent account is a new
business "relationship".

~~~
BEEdwards
How is it "histrionics"?

"are they bound by the agreement which opened their primary account, or is
there no legal agreement in place?"

How can you be bound by things you never agreed to?

"We signed you up for more services, but because you said yes once that means
you are always ours."

~~~
Pyxl101
I _think_ the argument (speculating - the article isn't clear on this) is that
the customers were bound to that agreement when they legitimately opened their
first account.

I agree that the article sounds like histrionics because it doesn't explain
the situation clearly. The article makes it sound like the customers are being
bound somehow based on their forged signatures, which sounds like hogwash to
me.

My suspicion is that the customers were bound to this term by opening their
original account -- or at least, that's Wells Fargo's argument. The legal
debate seems to be about whether the terms of service signed by the customer
at that time would prevent them from suing over the additional fraudulent
accounts. Basically, whether those terms of service apply to that situation or
not.

~~~
FullMtlAlcoholc
I'm a bit of a numbskull when it comes to legal matters, but wouldn't any
previous agreement between the bank and its customer become null and void when
the bank willfully and egregiously commits criminal acts by forging signatures
and signing them up for services they didn't agree to?

For me, this is one of the scariest issues USA faces, a de facto loss to right
of trial via binding arbitation

~~~
Lazare
First, no, contracts do not generally become void just because one party
committed a crime.

Not that it really matters because, second:

>when the bank willfully and egregiously commits criminal acts

Wells Fargo has not been found guilty of committing criminals acts at all,
much less willfully and egregiously. There are some ongoing criminal
investigations, and they were hit by some civil penalties. But there have been
no criminal convictions.

~~~
FullMtlAlcoholc
From above:

Consumer Financial Services Agreements: As of May 5th, the Consumer Financial
Protection Bureau has proposed a rule that would prohibit mandatory
arbitration clauses in financial services agreements that limit access to
class action lawsuits. Once formalized, this rule would apply to all
contracts, including those already signed. Although such a rule would not
necessarily prohibit mandatory arbitration for single-plaintiff claims,
arbitration clauses that do not specifically exclude class action lawsuits
from their reach may be invalid regardless.[1]

Consumer Contracts: Although generally upheld, mandatory arbitration clauses
in consumer contracts are non-binding when there is evidence of fraud. The
Theranos lawsuits have recently brought this reality back to the attention of
corporate lawyers. Because Theranos and Walgreens face accusations of
widespread fraud, otherwise enforceable arbitration clauses are thrown out,
allowing for class-action claims regardless. It’s important to note that these
cases demonstrate that the fraud must merely be investigated, not conclusively
proven, for the courts to now invalidate arbitration clauses.[1]

I think it's safe to say the alleged fraud in this case is under
investigation.

Edit: Link fixed!

[1]: [https://www.priorilegal.com/blog/the-limits-of-mandatory-
arb...](https://www.priorilegal.com/blog/the-limits-of-mandatory-arbitration-
clauses)

~~~
Lazare
Your link is broken for me, FYI. In any case:

> Judges in California and federal courts have ruled arbitration clauses
> signed by customers when they opened legitimate accounts prevent them from
> suing even over allegedly fraudulent accounts created without their
> knowledge.

[http://www.latimes.com/business/la-fi-wells-fargo-
arbitratio...](http://www.latimes.com/business/la-fi-wells-fargo-
arbitration-20151205-story.html)

Laws have been proposed to change this. Of course, given the election results,
I highly doubt the bills, or the proposed CFPB rule you mention are going
anywhere.

~~~
FullMtlAlcoholc
Fixed the link above! Can I pester you with one more question? Is there
anything in the law about good faith in contracts? Say, I sign a contract with
a private school for my son's education. (Note, this is a ridiculous scenario)
that includes binding arbitration. If I find that a teacher has been sexually
abusing him and the administration tried to cover it up, would I be restricted
from a lawsuit and only allowed binding arbitration?

~~~
Lazare
Talk to a lawyer in your local jurisdiction. :) But offhand:

> Is there anything in the law about good faith in contracts?

Not in the sense you mean, no. Generally speaking, if they sign it in bad
faith (that is, with no intent to comply), and they do not comply, that would
be fraud (ie, a crime). If they sign it in good faith (that is, with an intent
to comply) but later do not comply, that's breach of contract (ie, a tort) but
not fraud. In both cases the contract is broken, but _only because they broke
it_. The intent to break it isn't really relevant to that.

Generally speaking the solution for your question is "make sure the contract
contains a clause that automatically terminate the contract on initiation of a
criminal investigation for child abuse by the authorities" if you're worried
about that.

Edit: It's not directly relevant to your question, but I feel like I should
link this article which is hilarious and disturbing, and goes into some
details on the fraud/breach of contract distinction.
[https://www.bloomberg.com/view/articles/2016-05-23/countrywi...](https://www.bloomberg.com/view/articles/2016-05-23/countrywide-
mortgage-hustle-turns-out-not-to-be-fraud)

~~~
FullMtlAlcoholc
But why?

If one can prove that a party premeditated and willfully went against the
terms of the contract in order to deceive the other party and profited from
this deceit while also breaking laws, what is the legal reasoning behind
calling it a breach instead of fraud?

~~~
Lazare
Fraud is a crime; a general definition might be "deliberate deception to
secure unfair or unlawful gain", but in simple terms it's lying. If you lie to
someone for financial gain, it's a crime. But violating the terms of a
contract is _not_ a crime, at least in the general case.

> But why?

Because that's what the law says. :)

> If one can prove that a party premeditated and willfully went against the
> terms of the contract in order to deceive the other party and profited from
> this deceit while also breaking laws

Very, very simply: If you lied, it's fraud. If you didn't lie, then it's _not_
fraud. It might well be some other crime, but it's not fraud, because fraud is
a word that means lying. So you say:

> went against the terms of the contract in order to deceive

But it depends what you mean by that. If I meant to follow the contract when I
sign it, but later change my mind, and you just assume I'm following it, you
are deceived, but I didn't lie, and it's not fraud. If I didn't mean to follow
it when I signed it then I'm lying and it's fraud. Similarly if I mean to
follow it when I sign, later change my mind, and you then ask me "hey, are you
following the contract?", and I say "yes" even though I'm not, then I'm lying,
and it's fraud. The key element isn't whether or not you were deceived, or
whether or not I actually followed the contract, but whether I _lied_ ,
because _that 's what the crime is_.

~~~
FullMtlAlcoholc
Man, and I thought programming had difficult edge cases :)

From this post and the article you linked above, the takeaway I get is to ask
everyday "Are you following the contract?" I understand the legal definition,
but I gather that the layman will still think it's fraud.

I guess a simple solution in that scenario would be to have a checkbox asking
are you following the contract every time they login to the server.

Thanks, I learned a lot from you! :D

------
coldcode
It would seem to me that since WD offers free arbitration the prudent thing in
this case would be for every single person affected to file for it on the same
day and simultaneously withdraw their money leaving only $1 in the account. A
bank run and 100,000 filed cases would make for a fine mess.

------
johngalt
There is an obvious legal gap at work here and it isnt just wells fargo
exploiting it.

Once a business has your info on file they can effectively open additional
accounts or services for you at will. It can be difficult to seek any sort of
remedy because it would be hard to prove damages except in extreme cases.

------
DannyBee
Let's take a gander at the federal arbitration act: "A written provision in
any maritime transaction or a contract evidencing a transaction involving
commerce to settle by arbitration a controversy ... shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract."

Want to guess what grounds exist at law and equity for the revocation of a
contract? :)

Note also the now-common practice of requiring individual arbitration is not
well-tested in court either. The FAA pretty clearly preempts _court_ class
actions when there are mandatory arbitration provisions. However, it is
silent, and it's purpose unrelated, to whether that arbitration is individual
or class arbitration. It seems likely to me that a state could reasonably say
forcing _individual_ arbitration was against their public policy, and not have
that pre-empted by the FAA.

------
thr0waway1239
Outrageous! This is like a software company which pushes unwanted OS upgrades
on its customers and then hides behind customers agreeing to a nag-screen
exploding "offer" when the upgrade bricks some of the previously fine
computers. Thankfully we in the software business don't have to worry about
such things, because we are above such tactics.

All you little people, its really your fault for being such small fry...

~~~
bjelkeman-again
I recognise that behaviour. Indeed I was exposed to it.

------
Programmatic
It is despicable to me that citizens can be denied their right to access legal
remedy by companies that won't deliver services to individuals without them
agreeing to binding arbitration. Access to courts seems like it should be the
cornerstone of society and should not be allowed to be removed so easily.

The appeal of arbitration for a pair of similarly sophisticated entities that
have the ability to vet the clauses of the contract is obvious. But the
potential for abuse with one large organization picking the arbiter and a lot
of unsophisticated individuals trying their luck against them is pretty
obvious too.

------
mannykannot
Abuse of arbitration is one of the several things that the Democrats (with one
or two exceptions) have not made much of an issue over, and they wonder why
they lose.

------
logicallee
perhaps due to the clickbaity title, it seems people are reading "agree to
arbitration" as "agree that Well Fargo's internal decisions are final and
waive their right to legal remedy."

let's firstly identify that yes, this is how people in the thread take "agree
to arbitration."

Next let me ask: I did a quick Google search,

[https://www.google.com/search?q=does+arbitration+always+favo...](https://www.google.com/search?q=does+arbitration+always+favor+the+corporate+side)

expecting to see that, for example, perhaps arbitration always results in the
larger player being awarded whatever they say. (Meaning that it is equal to
saying "agree that its decisions are final and customers waive all recourse.")

But it seems the link isn't quite conclusive - it seems the results just show
that the "Forced arbitration clauses almost always favor the company over the
individual" \- which is very strong language, but is about "favor" and not
outright as categorical.

So I'm curious if people have experience with arbitration -- is it fair to
read the arbitration clause as being de facto tantamount to Wells Fargo's
decisions being final? (With the arbitration itself being an afterthought, a
mere formality.)

Or is it just a bit lopsided, but still not quite as final and definitive as
that?

I ask because in theory, in an environment of frivolous lawsuits that can cost
companies literally hundreds of thousands or millions of legal fees, it might
certainly make sense for arbitration clauses to limit the extent to which they
are embroiled in huge lawsuits.

This reason for arbitration would be a bit different from the reason that
"it's really just an excuse to say whatever we say is final."

If I were a corporation, I wouldn't think that an arbitration clause is the
same as saying "our company's policies are final and we decide what they mean:
you waive all right to any recourse".

Is that what other people here think it means?

(Genuine, open question - as you can see I did a Google search more or less
with this phrasing.) Curious what you think, or your experiences. Or whether
you've used arbitration clauses in the past, either on the corporate side
against a frivolous lawsuit, or as a consumer against a large corporation. (I
don't expect corporate lawyers from large corporations to read this comment
and respond honestly - but small startup CEO's and individuals, sure. Of
course, if you're doing evil work for a large corporation as a corporate
lawyer enforcing lopsided contracts, I guess you're welcome to come clean
under a throwaway...)

~~~
cnnsucks
This is worse than click bait; the headline is a falsehood designed to provoke
outrage. WF is NOT arguing that customers are bound by forged signatures,
despite what this headline implies. This is Fake News making the rounds. Good
job HN.

~~~
logicallee
you use really strong language (even in your username) and since it's just 27
days old, perhaps could make another one.

with that said, I think if you suggested an alternative title (under your
handle or a different one) that better reflects the contents of the article,
the mods would be inclined to change it. They often do - and clickbait titles
are explicitly against HN policy :)

so go ahead and make a suggested title change, under your current or a
different HN name. thanks.

~~~
mikestew
Yet despite the user name, despite the strong language, _cnnsucks_ is right:
it's a crap, click-bait headline. Don't believe me? Then _you_ go RTFA, and
better yet go read the Reuters article from whence this sprang. Still
convinced that the headline has _anything_ to do with the truth? (And to be
clear, the headline implies that customers agreed via forged signatures. No,
customers "agreed" with their real signature when they willfully opened their
original account.)

At the very least, link to the original Reuters article, and make a note to
quit giving BoingBoing hits.

~~~
logicallee
just to be clear I completely agree with that user.

