Fine print legal terms allow corporate and sexual abuse to flourish
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Repeat and persistent wrongdoing, both personal and corporate, is all too common. Harvey Weinstein abused and assaulted women for decades without ever being held accountable.  Wells Fargo broke the law and created millions of fraudulent accounts over several years – and every day brings new news of problems at Wells Fargo including illegal repossession of servicemembers’ cars, small business ripoffs, unwanted auto insurance, and unauthorized mortgage changes.

Policymakers in Washington rightfully have been appalled by these cases. But there has been far less interest in exploring the systemic conditions that have allowed wrongdoing of all types to persist for so long.


The causes of these very disparate harms are deep-rooted and wide-ranging, but there is some important overlap. Both Harvey Weinstein’s wrongdoing and Wells Fargo’s fraud persisted, at least in part, because of fine-print contractual terms used to cover up misconduct.

We now know that Harvey Weinstein used non-disclosure agreements to chill victims from talking about his abuse. Other cases of persistent sexual assault and harassment, like those involving Fox News and Sterling Jewelers, have been kept secret through forced arbitration clauses and confidentiality terms that ensure disputes are litigated in private and secret forums that allow the company to go years without facing public outcry or backlash.

Similarly, Wells Fargo used forced arbitration requirements, buried in the fine-print terms of its accountholder agreements, to prevent defrauded consumers from filing claims in open court, conducting discovery of the widespread nature of the problem, or litigating their cases through class actions that would have allowed everyone relief. And the company used confidential arbitration terms covering its employment disputes to prevent its employees from effectively exposing the fraud.

Harvey Weinstein, Sterling Jewelers, and Wells Fargo broke the law, but the terms they used to cover up their misconduct are largely legal.

Today, many courts interpret an obscure 1920s law meant for business-to-business negotiations to allow employers and large corporations to insist that disputes must be resolved in secret arbitration, not our public courts, as a condition of doing business with the company. For example, Lorrie Poublon alleged that her employer improperly denied her and her coworkers overtime pay by misclassifying them as salaried employees. But the Ninth Circuit concluded that fine-print arbitration requirements and confidentiality terms in their employment contracts were enforceable and prevented them from banding together or making their complaints public. Poublon’s employers, just like Wells Fargo, understood that public dispute resolution--one of the tenets of our legal system--can bring attention to illegal practices. They used their position of power to extract secrecy to the detriment of Ms. Poublon and all of the other workers who’d otherwise learn of the alleged misconduct.

Powerful corporations and employers also have an incentive to overreach by insisting on illegal secrecy requirements. Recently the Eleventh Circuit found that Keybank could not enforce a confidentiality requirement in its accountholder agreement against the few consumers that had noticed and challenged the bank’s practice of reordering debits to increase overdraft fees. But the Court merely excised that illegal term and continued to allow the bank to enforce the arbitration clause to prevent consumers from banding together in class actions.  KeyBank suffered no repercussions from inserting an illegal gag order and may have influenced some consumers who didn’t know they could challenge.  

The Consumer Financial Protection Bureau has attempted to bring sunlight to at least some forms of persistent wrongdoing. It recently enacted a rule preventing consumer financial companies like Wells Fargo and Keybank from barring people from joining together in the public courts, where the public can see what the case is about, and who won or lost. The rule will also require companies to submit information about individual arbitrations so the public can understand more about that process.

Lobbyists for Wall Street banks and payday lenders are fighting back and trying to convince the Senate to repeal the rule. They want to make sure that complaints about their illegal practices are kept secret, and it’s easy to see why.

Our technology gives us tremendous power to share news of misconduct quickly, but wrongdoing committed by powerful corporations and individuals too often happens in the shadows and out of the public view. We need to do everything we can to make sure that illegal conduct is exposed. Allowing the CFPB rule to become effective is an important first step.

David Seligman is an attorney at Towards Justice, a legal nonprofit in Denver advocating for workers’ rights.​