The bill has already passed the state Senate. The full Assembly,
the legislature's lower chamber, is expected to approve it in a
vote toward the end of August, after the summer recess.
Under the bill, judges could override contract clauses that
require customers to settle disputes through arbitration in
cases where a bank commits fraud using customers' personal
information. Arbitration clauses, which have become standard
practice since a 2011 U.S. Supreme Court decision, make
consumers agree not to sue in the future as a condition of
purchasing products or services.
Clauses inserted into Wells Fargo account-opening agreements
have blocked customers from taking the third-largest U.S. bank
to court over last year's revelations that it opened millions of
accounts without customer knowledge. Regulators fined the bank
$190 million for the alleged deceit, of which $5 million was to
be paid to customers.
The Consumer Attorneys of California backs the state's
legislation, and said customers have been trying to sue over the
issue since 2013, three years before regulators acted.
"By forcing customers into secretive arbitration, Wells Fargo
kept the scandal out of public view, allowing the fraud to
mushroom while the bank evaded full accountability," it said in
Republicans and others say class actions, where people band
together to share resources in a single lawsuit, only benefit
lawyers who reap high fees and suck up time and money.
Consumer-rights advocates portray arbitration as a fixed game
where companies hire and pay arbitrators to ensure disputes are
settled in their favor.
Momentum to do away with the clauses led the U.S. Consumer
Financial Protection Bureau to propose a federal rule last year
requiring companies to let customers join class actions. That
proposal has stalled in the face of opposition from Republicans,
who now control both Congress and the White House.
(Reporting by Lisa Lambert; Editing by David Gregorio)
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