Wells Fargo says customers gave up right to sue by having signatures forged

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

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.

http://www.reuters.com/article/us-wellsfargo-accounts-lawsui...

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.

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".

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.

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.

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

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.

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...

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...)