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.