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Real Stories of Consumers Harmed by Forced Arbitration

Wells Fargo Fraud

Tracy Kilgore, New Mexico

In July 2011, Tracy Kilgore went to a Wells Fargo branch to change a signature card on behalf of the Daughters of the American Revolution, where she volunteered as Treasurer. Tracy did not bank with Wells Fargo or have any accounts with them. The bank teller asked her for her name and ID and began typing away her computer, and Tracy promptly left once the change was processed.

Two weeks later, Tracy received a letter from Wells Fargo saying her credit card application had been rejected, though she never applied for one. She noticed the application was filed the day after she went to the local branch. Tracy soon found the rejected application was listed on her credit report, so she called and wrote to the bank for months asking them to remove it. They said it would take 7-10 days, then another 2-3 weeks, but it never happened. In the end, she never even got an apology.

Now, Tracy has joined with other defrauded customers in a class action lawsuit against the bank, but Wells Fargo is trying to force each consumer to fight them one-by-one in a biased and secretive arbitration system. Even though Tracy has never banked with Wells Fargo, their lawyers are trying to block her from suing them in court by pointing to an arbitration clause she never signed.

Servicemember Rights

Sergeant Charles Beard, California

Sergeant Charles Beard was about to be deployed to Iraq and asked for some help making his car payments. His lender, Santander Consumer USA, Inc., offered him a forbearance for a few months, but in exchange, had Sergeant Beard sign a modified lease contract. Little did he know, a forced arbitration provision was buried in the fine print.

While serving his country in Iraq, Sergeant Beard fell behind in his payments.  Men came to his home and repossessed the car – breaking federal law, which protects active duty soldiers by requiring lenders to obtain court orders before seizing their cars. Sergeant Beard brought a class action against the lender with other soldiers to enforce their protections under federal law, but their claims were thrown out due to a class action ban in the arbitration clause.

Payday Lending

Stephanie Banks, Oregon

In August 2013, Stephanie Banks made $15 an hour as a bookkeeper for the Salvation Army. To help pay rent for her and her son, she took out a $300 loan from the payday lender Rapid Cash, putting up her car’s title as collateral. Her interest rate was capped at 153.73% per year under state law.  Soon after, Stephanie started chemotherapy to treat her lung cancer and retired from her job. A year later, bills piled up and she had to declare bankruptcy. Her attorney got the payday loan discharged as part of the settlement.

Then, in August 2015, Stephanie was shocked when she received a letter from a collection service, claiming she owed Rapid Cash over $40,000. They threatened to destroy her credit if she did not pay immediately. When Stephanie disputed the claim in court, Rapid Cash responded by pointing to an arbitration clause, buried in the fine print of the original contract she signed two years earlier. The court ruled the clause still held and Stephanie would have to argue her case to a private arbitration firm chosen by Rapid Cash. To do this, she would have to pay $200 in arbitration fees, almost as much as her original loan.

For-Profit Colleges and Student Loans

Matthew Kilgore, California

Matthew Kilgore was working toward his dream of becoming a helicopter pilot when he enrolled at Silver State Helicopters, a for-profit aviation school that offered training and certification. At the school’s recommendation, Matthew took out a $55,000 private student loan from Keybank to cover his tuition. But in 2008, Matthew’s school abruptly went out of business, leaving students with student loan debt but no marketable skills or diplomas. Since then, his loans have nearly doubled to $103,000 with interest.

Matthew filed a lawsuit on behalf of himself and other Silver State students against Keybank to prevent them from ruining the students’ credit. However, because Keybank loan contracts contained a class action ban, a court ruled the students would have to settle disputes with Keybank individually in arbitration. Meanwhile, a set of other Silver State students who had similar loans with Student Loan Express, Inc. got $150 million in debt relief because their contracts did not include an arbitration clause.