Wells Fargo & Co. agreed to pay $3.7 billion to settle allegations that for years it mistreated millions of customers, causing some to lose their cars or homes. That record-setting amount still doesn’t mean the bank’s problems are over.
The head of the Consumer Financial Protection Bureau vowed that his agency might put further limitations on the bank. And the company itself warned it will have to set aside billions more in the fourth quarter to cover not only Tuesday’s settlement but other litigation as well.
“While today’s order addresses a number of consumer abuses, it should not be read as a sign that Wells Fargo has moved past its longstanding problems or that the CFPB’s work here is done,” Rohit Chopra, the agency’s director, said on a call with journalists.
“Importantly, the order does not provide immunity for any individuals, nor, for example, does it release claims for any ongoing illegal acts or practices.”
Tuesday’s agreement with the CFPB includes more than $2 billion in redress for customers, with the agency saying it found “widespread mismanagement” of auto loans, mortgages and deposit accounts. Taken together, the episodes chronicle an extraordinary 11-year period of illegal activity and mismanagement at one of the nation’s largest banks.
“We remain committed to doing the right thing for our customers and working closely with our regulators and others to deal appropriately with any issue that arises,” Chief Executive Officer Charlie Scharf said in a statement. “This far-reaching agreement is an important milestone in our work.”
Consumer harm
According to the CFPB, Wells Fargo illegally repossessed vehicles, bungled record-keeping on payments and improperly charged fees and interest. The bank agreed to a consent order without admitting the agency’s allegations.
The CFPB found some of the bank’s misdeeds continued until earlier this year. Take its auto loan servicing business: Wells Fargo repossessed vehicles even if a borrower had made a payment or entered into an agreement with the bank to stall the action, according to the agency. In all, customers affected by conduct in the car-loan business will receive more than $1.3 billion in redress.
The problems didn’t stop there. In the mortgage business, Wells Fargo erroneously identified some 190 customers as dead, and therefore didn’t assess whether they were eligible to modify a government-backed loan in the five years leading up to 2018. The bank agreed to pay those borrowers $2.4 million, or an average of $12,631 per person.
Wells Fargo also illegally charged surprise overdraft fees, and in more than 1 million cases, it unlawfully froze consumer accounts “based on a faulty automated filter’s determination” that there may have been a fraudulent deposit.
“The bank’s illegal conduct led to billions of dollars in financial harm to its customers and, for thousands of customers, the los
