Wells Fargo to pay $3.7B over consumer law violations
WASHINGTON (AP) — Consumer banking giant Wells Fargo agreed to pay $3.7 billion to settle a laundry list of fees that had hurt consumers by charging illegal fees and interest on auto loans and mortgages, as well as false charges overdraft fees for savings and checking accounts.
The Consumer Financial Protection Bureau on Tuesday ordered Wells to repay $2 billion to consumers and fined the bank $1.7 billion. It is the CFPB’s largest fine to date against a bank and the largest fine against Wells, which has spent years trying to redeem itself after a series of scandals surrounding its selling practices.
However, regulators made it clear that they believe Wells Fargo hasn’t done enough to clean up its act.
“Put simply, Wells Fargo is a corporate throwback that exposes one in three Americans to potential harm,” CFPB Director Rohit Chopra said in an interview with reporters.
Chopra said this pattern of behavior will require regulators to take additional action against Wells Fargo beyond the $3.7 billion in fines and penalties.
The bureau says the bank’s breaches affected more than 16 million customers. In addition to improperly charging its auto loan customers fees and interest, the bank has in some cases wrongfully repossessed borrowers’ vehicles. The bank also wrongly denied homeowners thousands of mortgage loan modifications.
Wells Fargo has been repeatedly sanctioned by US regulators for violations of consumer protection laws dating back to 2016, when Wells employees were found to have illegally opened millions of accounts to meet unrealistic sales targets. Since then, Wells executives have repeatedly said the bank is cleaning up its actions, only to find the bank violating other parts of the Consumer Protection Act, including its auto and mortgage lending businesses.
Back in 2018, Wells paid a $1 billion fine to cover widespread consumer law violations. At the time, this was the highest fine ever imposed on a bank for violations of consumer law.
The bank had previously signaled to investors that it expected additional fines and penalties from regulators. The bank committed $2 billion to potential regulatory matters in the third quarter.
Wells remains under a Federal Reserve order prohibiting it from growing further until the Fed believes its corporate culture issues are resolved. This order, originally issued in 2018, was only intended to last a year or two.
In a statement, CEO Charles Scharf said the agreement with the CFPB is part of an effort to “change operating practices at Wells Fargo and put these issues behind us.”
While Wells Fargo sought to frame the agreement with the CFPB as a solution to identified misconduct, CFPB officials said some of the violations cited in Tuesday’s order took place as recently as this year.
“This should not be taken to mean that Wells Fargo has overcome its problems,” Chopra said.
