Federal District Court in Northern California finds no consent to Wells Fargo arbitration clause

Posted on: February 6th, 2014 by Steve Larson
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Law and justice concept, gavelAnother court has recently held that a consumer does not consent to an arbitration clause it has not seen before.  Wells Fargo had a contract with the consumer, and argued that it later tacked on an arbitration clause through an amendment to the contract.  But the court held  that Wells Fargo failed to prove, by a preponderance of the evidence, that proper notice was provided to the consumer as to the addition of an arbitration agreement to her original agreement.

The original contract had a change of terms provision, that provided that the bank could change “charges, fees or other information.”  The Court notes, not unreasonably, that this did not alert the consumer that an arbitration clause might follow.  It’s not a charge, fee, or something like them.  The court held that the bank could amend the contract if the general subject matter of the amendment could have been reasonably anticipated when the contract was entered.

It was nice to see a court hold a lender to the language of its own change of terms provision.  A copy of the opinion can be found here.