Wells Fargo to pay $3.7 billion settlement over latest ‘illegal activity’ allegations

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Wells Fargo has been ordered by US government regulators to pay $3.7 billion in fines and refunds to customers, the largest fine to date against the bank, amid a long list of allegations of poor financial management.

The Consumer Financial Protection Bureau (CFPB) alleged that the bank illegally assessed fees and interest on car loans and mortgages, wrongfully repossessed customers’ cars and misapplied payments to car and mortgage loans. The watchdog also claimed Wells Fargo was charging consumers illegal overdraft fees and adding incorrect fees to checking and savings accounts.

Wells Fargo, which has spent years trying to rehabilitate itself after a series of scandals related to its business practices, will pay a $1.7 billion fine to the CFPB. The remaining $2 billion will be used to compensate more than 16 million customers who have been affected by “illegal activity”, the agency said Tuesday.

“Wells Fargo’s rinse-and-repeat cycle of breaking the law has hurt millions of American families,” CFPB Director Rohit Chopra said in a statement.

History of repeated violations

Wells Fargo said Tuesday its settlement with the CFPB will address “unacceptable practices” that have persisted at the bank for years.

Wells Fargo has been repeatedly sanctioned by US regulators for violating consumer protection law since 2016, when Wells employees illegally opened millions of accounts in order to meet unrealistic sales targets. Since then, Wells has gone on about saying he was cleaning up his act, only to be repeatedly fined for additional violations of consumer protection law.

“As we have said before, we and our regulators have identified a series of unacceptable practices which we have worked systematically to change and provide corrective action to customers where warranted,” CEO Charlie Scharf said in a statement on Tuesday. .

He added that the agreement “would put these problems behind us”.

The Associated Press contributed to this report.

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Christopher J. Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch and covers business, consumer and financial stories ranging from economic inequality and housing issues to bankruptcies and sports affairs.

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