SACRAMENTO, Calif. (AP) — A bill that could require Wells Fargo to go to court over its fake accounts scandal has been signed by California Gov. Jerry Brown.
The bill signed Wednesday would prohibit the San Francisco-based bank and other businesses from relying on contract provisions that require customers to settle disputes through arbitration rather than the courts. It applies only in disputes involving fraudulently created accounts at banks.
So-called mandatory arbitration clauses are common in consumer contracts. Democratic Sen. Bill Dodd of Napa says those agreements shouldn’t apply to accounts opened fraudulently.
The California Chamber of Commerce says the bill is likely pre-empted by federal law. The Chamber opposed Dodd’s bill, saying it could subject businesses to costly lawsuits.