How to return holiday gifts
Wegmans recalls cauliflower products due to possible E. coli contamination

Wells Fargo to pay $575 million in settlement with 50 states for consumer fraud

6a00e550081576883401b7c962a0cc970b-320wi

Photo: Laimerpramer

Wells Fargo agreed to a $575 million settlement Friday with fifty states and Washington, D.C.,  due to of the bank’s illegal sales practices. Wells Fargo, the nation’s largest bank, has acknowledged opening millions of deposit, credit card, and other accounts and conducting transfers of funds without customer authorization during various periods from 2002 through 2017.

“Wells Fargo customers entrusted their bank with their livelihood, their dreams, and their savings for the future,” said California Attorney General Xavier Becerra. “Instead of safeguarding its customers, Wells Fargo exploited them, signing them up for products – from bank accounts to insurance – that they never wanted. This is an incredible breach of trust that threatens not only the customers who depended on Wells Fargo, but confidence in our banking system. As our investigation found, Wells Fargo’s conduct was unlawful and disgraceful.”

California will receive $148.7 million, the largest payment under the settlement.

The settlement resolves investigations into Wells Fargo’s repeated misconduct spanning more than a decade concerning its sales practices, mortgage rate-lock fees, and add-on products on auto loans. During this time, Wells Fargo opened unauthorized accounts and enrolled customers in bank products to meet aggressive sales goals, as result of management pressure, threat of job loss for employees, and an abusive company culture, Becerra said. 

Wells Fargo acknowledged various instances of misbehavior under the settlement. The bank opened more than 3.5 million unauthorized accounts and enrolled 528,000 customers in online bill pay based on improper sales practices. Wells Fargo also enrolled some consumers in renter and life-insurance policies that the consumer never authorized. From 2005 to 2016, Wells Fargo added collateral protection insurance or delayed cancellation of such insurance on millions of auto loans. 

Customers have previously obtained compensation through the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, class action lawsuits, and bank efforts to make refunds to customers. Through this settlement, Wells Fargo will also create a consumer redress review program where consumers who haven’t gotten refunds can seek review of their complaints.

Among the bank’s payments in 2018 were $1 billion in fines to federal regulators for consumer mistreatment and $480 million for an investor class-action lawsuit.

Earlier this year, the Federal Reserve imposed a growth ban on Wells Fargo, which will continue until the bank can show that it’s fixed its sales practices that exploit consumers.

Copyright 2018, Rita R. Robison, Consumer Specialist

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

azure

Why hasn't Wells Fargo had its bank charter revoked? Massive fraud against customers seems like reasonable cause to do so.

Rita

Hi azure,

I agree. This is about the third round of their fines for fraudulent behavior.

Rita

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)