🏦Wells Fargo to pay $3.7 billion in CFPB settlement over consumer mistreatment allegations.
Wells Fargo has agreed to pay a settlement of $3.7 billion to the Consumer Financial Protection Bureau (CFPB) in relation to customer abuse allegations. These allegations pertain to checking accounts, mortgages, and auto loans, with some incidents of misconduct occurring as recently as this year. The settlement resolves the CFPB's investigation into these abuses.
According to a statement by the CFPB, Wells Fargo has been ordered to pay a record $1.7 billion in civil penalties and more than $2 billion in compensation to customers with 16 million accounts. In a separate statement, the San Francisco-based bank indicated that many of the actions required as part of the settlement have already been completed.
“The bank’s illegal conduct led to billions of dollars in financial harm to its customers and, for thousands of customers, the loss of their vehicles and homes,” the agency said in its release. “Consumers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank.”
The scope of wrongdoing detailed by the CFPB shows that Wells Fargo had problems servicing customers well beyond its 2016 scandal involving millions of fake accounts.
Wells Fargo fourth-quarter expenses would include a $3.5 billion operating loss, or $2.8 billion after taxes, from the incremental costs of the CFPB civil penalty and customer remediation efforts, as well as other legal matters. The bank is still expected to post an overall profit when it reports in mid-January.
The CFPB head said that regulators should consider whether limitations beyond the Fed’s asset cap and mortgage servicing restrictions needed to be imposed on the bank. The $1.7 billion fine assessed on Wells Fargo was the largest in the agency’s history, according to a senior official.
“In the CFPB’s eleven years of existence, Wells Fargo has consistently been one of the most problematic repeat offenders of the banks and credit unions we supervise,” Chopra told reporters, rattling off a list of previous settlements.
Consumers who are still experiencing problems with Wells Fargo or other banks were encouraged to submit complaints via the CFPB website.