Wells Fargo Ordered To Pay Customers $3.7 Billion For Causing ‘Financial Harm’
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Topline
Wells Fargo will have to pay $3.7 billion in fines and refunds to customers for several consumer financial law violations, according to U.S. regulators Tuesday, the largest penalty against the bank to date after a string of violations in recent years.
The Consumer Financial Protection Bureau ordered Wells Fargo to pay $2 billion in refunds to over 16 million affected customers in addition to $1.7 billion in penalties.
Wells Fargo “illegally assessed fees and interest charges” on auto and mortgage loans, incorrectly repossessed customer cars, mismanaged payments to auto and mortgage loans, charged “unlawful surprise” overdraft fees and applied “other incorrect charges” to checking and savings accounts, the agency said.
The bank was also ordered to stop charging surprise overdraft fees while an account holder has available funds.
The $1.7 billion in penalties will go to CFPB’s Civil Penalty Fund for providing relief to victims of consumer financial law violations.
Wells Fargo was noted as a “repeat offender” by CFPB after the bank had already been fined $3.6 million for illegal student loans practices, $35.7 million for trading referrals for cash and marketing services, $100 million for secretly opening authorized accounts and $1.5 billion for harmful auto loan practices.
Wells Fargo did not immediately respond to a request for comment by Forbes.
Big Number
$2.09 billion. That’s how much Wells Fargo was ordered to pay in penalties for its involvement in the 2008 housing crisis in 2018, according to the Department of Justice.
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Surprising Fact
The Federal Reserve ordered Wells Fargo to maintain its assets below $1.95 trillion in 2018 until the bank resolved its ongoing issues, according to Reuters. Chairman Jerome Powell noted in September that the Federal Reserve will continue to hold the asset cap until “widespread and pervasive” problems are controlled.
Key Background
Wells Fargo has continued to be sanctioned by U.S. regulators for violations of consumer protection law since the bank admitted to creating 3.5 million fake accounts for existing customers without their consent. After being fined $100 million for opening unauthorized accounts, Wells Fargo agreed to pay $3 billion in a 2020 settlement with the Department of Justice and the Securities and Exchange Commission. In addition to its sales practices, Bloomberg reported in March this year the bank had disproportionately denied mortgage refinancing applications from Black customers. Responding to the bank’s recent troubles, CEO Charlie Scharf said the bank has “made significant progress” since its 2020 settlement while it remains “committed to doing the right thing for our customers and working closely with regulators and others to deal appropriately with any issue that arises.”
Further Reading
Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal (Forbes)
Wells Fargo Gets Into Trouble Yet Again Over Alleged Fraud (Forbes)