Of the $185 million in the Wells Fargo settlement, most will go to government agencies as penalties. Very little will go to customers. Thinkstock By Knight Kiplinger, Editor Emeritus From Kiplinger's Personal Finance, December 2016 QI hear that a federal agency is about to allow bank customers who are victims of fraud and deception, such as Wells Fargo’s opening of 2 million unrequested accounts and credit cards, to use class-action lawsuits for redress, rather than arbitration. What do you think about this?A I’m appalled by these revelations of fraud, which were the result of bank executives setting unreasonable sales goals for low-level employees, pressuring them and giving them incentives to open the phantom accounts. Some 5,300 sales staff and managers were fired, and two top executives will forfeit at least $60 million in anticipated stock compensation. See Also: Great Credit Unions Anyone Can Join But how to deter this behavior and also provide meaningful restitution to victims? The proposed solutions all have limitations. Of the $185 million in the Wells Fargo settlement, most will go to government agencies as penalties. Very little will go to customers—perhaps $5 million to reimburse unwarranted bank fees, or as little as $25 per account. The lion’s share of such settlements should go to victims. Advertisement Almost all consumer finance agreements (signed by customers when they open accounts) require that you settle disputes by arbitration rather than legal action. But few bank customers go to the trouble and expense of arbitration to recover small amounts. That’s why the federal Consumer Financial Protection Bureau recently proposed a rule allowing bank customers to start or join class-action lawsuits. The rule will go into effect in a few months, unless it is blocked by Republican opponents in Congress. But such suits also have a fairness problem: They typically yield tiny restitution payments to the class members but generate huge fees for their lawyers (sometimes 25% or more of multimillion-dollar settlements). I would prefer, instead, that the feds reform the arbitration clause in consumer finance agreements—requiring banks, for example, to pay for arbitration; permitting the customer to have legal representation; allowing all the remedies typically available in court, including punitive damages; and allowing customers to band together in a collective arbitration. That would help level the playing field for bank customers. Have a money-and-ethics question you’d like answered in this column? Write to editor in chief Knight Kiplinger at email@example.com.