Wells Fargo ordered to pay $3.7 billion for ‘illegal activity’ including unjust foreclosures and vehicle repossessions


New York
CNN
,

Federal regulators fined Wells Fargo $1.7 billion on Tuesday for “widespread mismanagement” over several years that damaged more than 16 million consumer accounts.

The Consumer Financial Protection Bureau said Wells Fargo’s “illegal activity” included abusing repeated loan payments, wrongfully foreclosing on homes, illegally repossessing vehicles, wrongfully assessing fees and interest, and Including charging surprise overdraft fees.

The CFPB ordered Wells Fargo to pay a $1.7 billion civil penalty in addition to more than $2 billion to compensate consumers for a range of “illegal activity”.

The misconduct described by the CFPB echoes previously reported revelations that have emerged about Wells Fargo since 2016 when the bank’s fake-accounts scandal sparked a national storm.

“Wells Fargo’s oft-repeated cycle of violating the law has harmed millions of American families,” CFPB Director Rohit Chopra said in a statement.

Chopra described Wells Fargo as a “repeated offender” and said Tuesday’s fine is an “initial step” toward holding the bank accountable. This suggests that Wells Fargo may not be out of the penalty box with regulators anytime soon.

Also Read :  Why the direct-to-consumer business model is dead

The misconduct described by the CFPB echoes previously reported revelations that have emerged about Wells Fargo since 2016 when the bank’s fake-accounts scandal sparked a national storm.

In a statement, Wells Fargo stressed that the broad-reaching settlement with the CFPB has resolved a number of cases, most of which have been “pending for many years.” The bank said the necessary action “has already been substantially completed.”

“We and our regulators have identified a range of unacceptable practices, which we are systematically working to change and provide customer remediation,” Wells Fargo CEO Charlie Scharf said in the statement. “This far-reaching settlement is an important milestone in our work to transform operating practices at Wells Fargo and put these issues behind us.”

Wells Fargo said it expects the CFPB settlement to cost it $3.5 billion before taxes in the fourth quarter.

According to the CFPB’s enforcement action, Wells Fargo’s auto loan business had “systemic failures” that damaged more than 11 million accounts. Regulators say those failures caused Wells Fargo to improperly repossess some borrowers’ vehicles, improperly charge fees and interest, and fail to refund some fees.

Also Read :  Ethical Issues in the Law Business Affect Family’s Succession Plans

In addition, regulators say Wells Fargo improperly denied thousands of mortgage loan modifications, causing some customers to lose their homes in “wrongful foreclosures.”

“The bank was aware of this problem for years before finally addressing the issue,” the CFPB said.

Wells Fargo also “illegally” charged surprise overdraft fees and “illegally” froze more than 1 million consumer accounts, preventing consumers from accessing their funds for an average of at least two weeks.

The Wells Fargo scandal that began in 2016 spotlighted Wells Fargo’s treatment of employees and customers, leading to congressional hearings, countless regulatory investigations, and ultimately the ousting of two of the bank’s CEOs.

In her final act as chair of the Federal Reserve, Janet Yellen threw out the book on Wells Fargo in February 2018 by imposing unprecedented penalties on the bank that remain in place today.

Also Read :  A Fine Economic Mess in the United Kingdom

The CFPB said Wells Fargo has been ordered to pay more than $2 billion in customer refunds, including more than $1.3 billion to consumers hurt by the bank’s auto lending strategy and illegal surprise overdraft fees and others related to deposit accounts. Includes over $500 million for malpractice.

Regulators said Wells Fargo has also been ordered to pay nearly $200 million in refunds to those harmed by the bank’s mortgage servicing accounts.

Going forward, Wells Fargo has been ordered by the CFPB to ensure that auto loan borrowers receive refunds for certain add-on fees and to stop charging bank account holders surprise overdraft fees.

The agency said these fees are levied when customers have funds available at the time of purchase, but have a negative balance after subsequent transaction settlement.

Source

Leave a Reply

Your email address will not be published.