SACRAMENTO—The California legislature has passed a bill (SB 33) that would prohibit the application of mandatory arbitration clauses for bank accounts that were created fraudulently.
The legislation was passed in the wake of the Wells Fargo scandal.
When two parties have agreed to arbitration, existing law requires that a court order them to arbitrate, absent certain determinations that provide exceptions to arbitration, the bill explains, according to a report by JDSupra.com.
“This bill would add to these determinations instances in which a state or federal chartered depository institution is seeking to apply a written agreement to arbitrate, contained in a contract consented to by a respondent consumer, to a purported contractual relationship with that consumer that was created by the petitioner fraudulently without the consumer’s consent and by unlawfully using the consumer’s personal identifying information,” states the legislation, according to a report by JDSupra.com.
If signed by the governor, Senate Bill 33 would take effect on Jan. 1, 2018.