Wells Fargo Bank has admitted to opening millions of customer accounts and credit card accounts without customer authorization since 2005.  Stories have emerged of a bank gone wild where employees working in an intense sales culture felt pressured to open new accounts to meet sales quotas.

Wells Fargo has agreed to pay $185 million in fines to the Consumer Financial Protection Bureau.

So what happens when customers file bankruptcy on credit card accounts fraudulently opened without any authorization?  Naturally, Wells Fargo filed bankruptcy Proof of Claims with the court itemizing the amounts not legally owed.  And that reality leads to the next logical question:  Has Wells Fargo committed bankruptcy fraud for filing false proof of claims?

False Claims—18 U.S.C. § 152(4):

A person who…knowingly and fraudulently presents any false claim for proof against the estate of a debtor, or uses any such claim in any case under title 11, in a personal capacity or as or through an agent, proxy, or attorney;…shall be fined…, imprisoned…, or both.

It would be hard for Wells Fargo to argue that it has not “knowingly and fraudulently” presented false claims in bankruptcy proceedings since they authored the false debt.


A tougher question for bankruptcy attorneys is how they will be able to distinguish valid claims filed by Wells Fargo from the fraudulent claim.  All the claims look the same, so how do you tell the difference?

Most claims filed in bankruptcy cases do not attach copies of signed credit agreements, so it is unlikely that clients will be able to spot fraudulent claims either.  Signed credit agreements are becoming a thing of the past and it is extremely rare for a proof of claim to include a copy of a signed revolving credit card agreement.

The Wells Fargo scandal highlights a major problem with this new age of “inferred consent” in the credit card industry.  As the the industry has moved away from traditional signed credit agreements to modern methods of assent over the phone or internet, it becomes increasingly difficult for consumers to deny liability for revolving credit accounts.  Increasingly, credit card bill collectors sue not under traditional breach of contract legal theories but under Account Stated doctrines where liability is claimed because the liability is stated in monthly account statements.

So, if a Wells Fargo Proof of  claim does not attach copies of signed credit agreements, how can we be sure the debt is real?  How should debtor attorneys react to all Wells Fargo claims?  Should objections be automatically filed to every Wells Fargo claim until they can be verified?  If no written agreement can be produced, should it be assumed that the debt is invalid?  Should the bank be entitled to recoup the money loaned without interest under some type of Quantum Meruit or Unjust Enrichment theory?

This latest Wells Fargo scandal poses a major dilemma for Wells Fargo, bankruptcy attorneys and the court.   Generally speaking, the filing of a proof of claim is prima facia evidence of the validity of a debt.  Does that legal presumption belong to Wells Fargo claims going forward?