Wells Fargo Hit With $3.7 Billion Over Consumer Banking Violations
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Last updated 03/08/2024 by
NewsSummary:
Wells Fargo has agreed to pay $1.7 billion in fines and $2 billion in redress to the Consumer Financial Protection Bureau (CFPB) to settle claims that it engaged in widespread banking violations over the last decade that harmed millions of consumers. The bank misapplied customer payments on auto loans, wrongfully repossessed some borrowers’ cars, and charged overdraft fees even when customers had enough money to cover purchases they made with their bank cards. The fine also covers improper mortgage and auto loan fees Wells Fargo charged customers, as well as the bank’s practice of freezing customers’ bank accounts too quickly and closing them when automatic fraud detection systems flagged unusual activity.
Wells Fargo has agreed to pay $1.7 billion in fines and $2 billion in redress to settle claims that it engaged in widespread banking violations over the last decade that harmed millions of consumers, the Consumer Financial Protection Bureau said on Tuesday.
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Why was Wells Fargo fined?
The bank misapplied customer payments on auto loans, wrongfully repossessed some borrowers’ cars, and charged overdraft fees even when customers had enough money to cover purchases they made with their bank cards, according to an order filed by the consumer protection bureau. Wells Fargo stopped the conduct this year as part of a larger effort to clean up other abusive practices stretching back a decade, the filing said.
As part of its settlement with the regulator, Wells Fargo has also been repaying customers, returning improperly charged fees, and offering some financial relief to those whose finances and credit ratings were hurt by the bank’s practices. The damages are expected to eventually total $2 billion.
“This far-reaching agreement is an important milestone in our work to transform the operating practices at Wells Fargo and to put these issues behind us,” Charles Scharf, Wells Fargo’s chief executive, said in a statement. Wells Fargo is “a different company today,” he added.
The fine also covers improper mortgage and auto loan fees Wells Fargo charged customers, as well as the bank’s practice of freezing customers’ bank accounts too quickly and closing them when automatic fraud detection systems flagged unusual activity. Some of the practices began as early as 2011, but almost all continued well beyond the bank’s initial reckoning with regulators over its widespread violations, which began in 2016.
“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” Rohit Chopra, the Consumer Financial Protection Bureau’s director, said in a statement. “This is an important initial step for accountability and long-term reform of this repeat offender.”
Key takeaways
- Wells Fargo has agreed to pay a total of $3.7 billion in fines and redress to settle claims of widespread banking violations over the last decade that harmed millions of consumers.
The bank engaged in practices such as misapplying customer payments on auto loans, wrongfully repossessing borrowers’ cars, and charging overdraft fees even when customers had enough money to cover purchases. - As part of the settlement, Wells Fargo has been repaying customers and offering financial relief to those whose finances and credit ratings were hurt by the bank’s practices.
- The fine also covers improper mortgage and auto loan fees charged to customers, as well as the bank’s practice of freezing and closing customer accounts too quickly in response to automatic fraud detection.
- Some of the practices date back to 2011 and continued beyond the bank’s initial reckoning with regulators in 2016.
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