This week, Congress will hold hearings about the Well Fargo fake account scandal and the Equifax data breach. The scandals engulfing Wells Fargo and Equifax aren’t unique. They are symptomatic of a larger trend of big banks and corporations escaping accountability for their widespread wrongdoing, ensuring that Wall Street continues to rake in record profits while Main Street suffers.
Last year, we learned that Wells Fargo employees have been secretly opening sham deposit and credit card accounts. At last count, 3.5 million hardworking Americans have been swindled by Wells Fargo’s fake account scandal. How did Wells Fargo get away with opening fake accounts for so long? A big reason is that Wells Fargo contracts blocked consumers from enforcing their basic constitutional right to sue the bank in court. Instead, people were forced into biased, secretive arbitration proceedings (where cases are resolved by hired decisionmakers rather than judges and juries) and often were required to sign confidentiality agreements. Forced arbitration clauses, when combined with class-action bans, stop individuals from coming together to vindicate their collective rights. This prevents the public or Congress from identifying the full scope of wrongdoing by a corporation.
Not to be outdone, Equifax, one of the nation’s largest credit services, announced last month that the data of some 143 consumers—almost 40 percent of the adult population—was hacked. Incredibly, rather than make a good faith effort to rectify a failure of their own making, when they offered consumers free credit monitoring for one year, they included get-out-of-jail-free provisions for the company in the contract. These provisions would have limited the ability of consumers to sue Equifax and forced many customers into secretive arbitration proceedings instead. Equifax removed the offending provisions only after it was shamed on social media, and after Public Citizen sent the company a letter demanding that it remove the egregious provisions.
Congress has an opportunity this week to begin holding these institutions accountable. The U.S. Senate should vote to uphold the Consumer Finance Protection Bureau rule that allows consumers to band together to sue financial bad actors in court. The U.S. Chamber of Commerce and other big business proponents are pushing lawmakers to repeal the rule – evidence of the business forces’ latest attempt to ensure they can cheat consumers with impunity.
In addition, we are calling on Congress to:
•Pass legislation that provides free credit freezes for all consumers;
•Investigate whether Equifax executives engaged in insider trading by selling shares of Equifax stocks weeks before the hack was made public;
•Urge Equifax and Wells Fargo to finally do right by their customers and remove forced arbitration clauses from all of their contracts;
•Encourage big institutions to disclose their lobbying and political expenditures so the American public can better understand corporate influence-peddling;
This week’s hearings will be illustrative. Congress can once again side with big banks or they can protect American consumers. We’ll be watching to see what they do.