Wells Fargo Announces $575 Million Settlement in Consumer Abuse Cases

Banking giant Wells Fargo has confirmed, this week, their plan to pay a $575 settlement in an attempt to assuage claims made by states in the US that the bank created phony checking accounts, in addition to other customer abuses.

It was only two years ago that Wells Fargo fist agreed to pay $190 million in order to settle claims made by the federal government that the national bank had performed the same alleged, fraudulent activities—creating phony bank accounts—as well as improperly referring and charging real customers for various unauthorized financial services and products.  According to the Iowa state office of the attorney general, the new deal, then, will settle a handful of similar claims made by Attorneys general from all 50 of the United States as well as the District of Columbia. 

In a statement, Wells Fargo Chief Executive Officer Tim Sloan comments that this agreement, which they reached on Friday, underscores the bank’s “serious commitment” to correcting their past indiscretions as the beginning of building a better banking experience. 

By the end of Q3 2018, the data shows the bank had already set aside $400 million of its promised settlement amount.  In a statement, then, the company has estimated it expects to be able to allocate the remaining $175 million before the end of the year. 

In addition to the payment, though, the settlement also requires that Wells Fargo create a customer restitution program. This program will ensure that wronged customers who have not received compensation from the current remediation efforts will eventually be satisfied through other refund opportunities.  Also, the settlement requires the bank to create a website that clearly outlines the remediation programs that are already in place. 

Responding to the original charges, California Attorney General Xavier Becerra said, in a statement, “This is an incredible breach of trust that threatens not only the customers who depended on Wells Fargo, but the confidence in our banking system.”

Unfortunately for Wells Fargo, they still have a long way to go.  After reaching other settlements with the United States Consumer Financial Protection Bureau (CFPB), the Office of the Comptroller of the Currency, the Los Angeles city attorney, and New York’s Office of the Attorney General, the bank still faces an investigatory probe from the US Securities and Exchange Commission (SEC), the US Department of Justice, and the US Department of Labor.

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