Wells Fargo Bank N.A. has reached a settlement with 50 states and the District of Columbia under which it will pay $575 million to resolve claims that the bank violated state consumer protection laws over several sales practices, including creating unauthorized accounts, and other actions that affected millions of customers.
The settlement agreement addresses allegations that Wells Fargo:
- opened millions of unauthorized accounts and enrolled customers into online banking services without their knowledge or consent;
- improperly referred customers for enrollment in third-party renters and life insurance policies;
- improperly charged auto loan customers for force-placed and unnecessary collateral-protection insurance;
- failed to ensure that customers received refunds of unearned premiums on certain optional auto finance products; and
- incorrectly charged customers for mortgage-rate-lock extension fees.
"This agreement is unique and one of the largest multistate settlements with a bank since the National Mortgage Settlement in 2012," said Iowa Attorney General Tom Miller, in a press release announcing the settlement. "This significant dollar amount, on top of actions by federal regulators, holds Wells Fargo accountable for its practices." Miller also noted that the settlement represents the most significant engagement involving a national bank by state attorneys general acting without a federal-law enforcement partner.
According to the states’ allegations, Wells Fargo identified more than 3.5 million accounts where customer accounts were opened, funds were transferred, credit card applications were filed, and debit cards were issued without the customers’ knowledge or consent. The bank also identified 528,000 online "bill pay" enrollments nationwide that may have resulted from improper sales practices at the bank. In addition, Wells Fargo improperly submitted more than 6,500 renters insurance and/or simplified term life insurance policy applications and payments from customer accounts without the customers’ knowledge or consent.
Wells Fargo has previously entered consent orders with federal authorities—including the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau—related to its alleged conduct. The multi-state settlement also requires Wells Fargo to create a consumer restitution review program. Consumers who have not been made whole through restitution programs already in place can seek review of their inquiry or complaint by a bank escalation team for possible relief.
U.S. PIRG’s response. Ed Mierzwinski, U.S. PIRG Education Fund Senior Director for Federal Consumer Programs, commended the "joint action to hold Wells Fargo more accountable for its seemingly endless litany of alleged consumer law violations." Only a combination of strong federal consumer laws and strong federal enforcers, buttressed by attorneys general enforcing strong state laws and private attorneys bringing actions on behalf of consumers, can hold powerful corporations accountable, Mierzwinski added.
Companies: U.S. PIRG; Wells Fargo Bank N.A.
MainStory: TopStory BankingOperations ConsumerCredit CreditDebitGiftCards CrimesOffenses EnforcementActions IowaNews Mortgages StateBankingLaws
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