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.
For me, this is one of the scariest issues USA faces, a de facto loss to right of trial via binding arbitation
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.
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...
> 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...
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.
> 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...
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?
> 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.
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
Now, if you can show the sole purpose of him forming the business with you was to steal your source code, then that's fraud.
Wells Fargo didn't open accounts for random people; they opened accounts for their customers. Who agreed to resolve future disputes via binding arbitration. And one of those future disputes is over the fake accounts Wells Fargo opened later.
Whatever you think of arbitration agreements, it would make no sense to have one which terminated the moment you have a dispute.
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 that fraud in this case has been conclusively proven.
[1]: https://www.priorilegal.com/blog/the-limits-of-mandatory-arb...
Full accounting of moral behavior includes an absolute prohibition on selling with an intend to deceive via an asymmetry of information, since risk can be epistemic/subjective related to ignorance of outcomes that the counterparty already knows about, then they sold you a product/service/contract with an intend to offload risk on you, which is strictly immoral period.
Absolute prohibition on parasitism via exchanges made via an asymmetry of information and they cannot prevent restitution because you agreed to not sue for something else.
What a bunch of nonsense.
This is a legal argument about venue - where and how the case should be heard. Getting angry at Well's Fargo might feel good, but in the end its pointless. Understanding the law itself does have practical use going forward. Perhaps the scope of signing away your right to a class action will be better understood.
I don't think there is a lack of understanding, I think (although I have no evidence for this) that MOST consumers, if asked what that clause meant, would say something like "Oh, that's the weasel words that let the company get around legal rules." Which is essentially true.
The problem is lack of power, not lack of understanding. There is no way to avoid these arbitration clauses. The companys' interests are such that they will include them and make no exceptions; consumers cannot even refuse and find a competitor because ALL competitors in the market will insist on it. So long as we offer a "don't have to be subject to the law" clause, everyone will use it.
This is not really a choice if you want to use a mobile phone or any tele-communications service. Same goes for employment contracts.
http://www.latimes.com/business/la-fi-wells-fargo-arbitratio...
The very fact that fraudulently "opening" a new account counts as a "dispute" for "arbitration" shows what a load of shit mandatory arbitration agreements are.
"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."