Wells Fargo agrees to pay back 16 million customers in a $3.7 billion settlement
WASHINGTON — Consumer banking giant Wells Fargo has agreed to pay $3.7 billion to settle a laundry list of fees that have harmed consumers by charging illegal fees and interest on auto loans and mortgages, as well as improperly applying overdraft fees to savings and savings accounts. ongoing.
The Consumer Financial Protection Bureau on Tuesday ordered Wells to repay consumers $2 billion and fined the bank $1.7 billion. It’s the largest fine yet against any bank by the CFPB and the largest against Wells, which has spent years trying to rehabilitate itself after a series of scandals related to its sales practices.
“Wells Fargo’s repeated rinse cycle of law violations has harmed millions of American families,” CFPB Director Rohit Chopra said in a statement Tuesday. “This is an important initial step for long-term accountability and reform for this repeat offender.”
Who qualifies for a Wells Fargo settlement?
The bureau says the bank’s bad behavior has affected more than 16 million customers.
In addition to improperly charging auto loan customers fees and interest, the bank has in some cases improperly repossessed borrowers’ cars. The bank also improperly rejected thousands of homeowners’ mortgage loan modifications.
How much do people get from the Wells Fargo Settlement?
The bureau says Wells will pay more than $2 billion in compensation to more than 16 million affected customer accounts.
- More than $1.3 billion will go to affected auto lending accounts.
- More than $500 million will be allocated to affected deposit accounts, including $205 million to accounts charged with illegal sudden overdraft fees.
- Nearly $200 million will go to affected mortgage servicing accounts.
The bank’s $1.7 billion fine will go to the bureau’s civil penalties fund, where it will be used to provide relief to victims of Consumer Financial Act violations.
How do I get my Wells Fargo settlement?
The CFPB asks Wells to contact affected clients about relief. Eligible consumers do not have to take any action.
The amount of money each customer is entitled to will vary.
The CFPB order indicates that those who wrongfully repossess their vehicle are eligible for at least $4,000 in compensation. Those affected by improperly frozen accounts are eligible to receive at least $150.
What happened to the Wells Fargo settlement?
Wells Fargo has been penalized repeatedly by US regulators for consumer protection law violations since 2016, when it was discovered that Wells employees illegally opened millions of accounts in order to hit unrealistic sales targets. Since then, Welsh executives have repeatedly said the bank is cleaning up its act, only for the bank to be found in breach of other parts of consumer protection law, including in its auto and mortgage lending businesses.
In 2018, Wells paid a $1 billion fine to cover widespread consumer law violations. It was, at the time, the largest fine yet against a bank for consumer law violations.
The bank had previously signaled to investors that it expected additional fines and penalties from regulators. The bank set aside $2 billion in the third quarter to cover potential regulatory issues.
And Wells remains subject to an order from the Federal Reserve preventing him from growing further until the Fed sees his corporate culture problems resolved. This order, originally issued in 2018, was only expected to last a year or two.
In a statement, CEO Charles Scharf said the agreement with CFPB is part of efforts to “transform Wells Fargo’s operating practices and put these problems behind us.”
Wells Fargo stock price
Wells’ share price fell 2% on Tuesday, closing at $40.98 on the New York Stock Exchange.
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USA TODAY reporter Billy Schulz contributed to this report.
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