Wells Fargo has agreed to pay $3.7 billion in penalties and damages to settle allegations that it wrongfully foreclosed on homes, illegally repossessed vehicles and charged surprise overdraft fees, among other things.
The US Consumer Financial Protection Bureau said in a statement Tuesday that the bank’s activities had “harmed millions of American families” and called the payment “an important initial step for accountability and long-term reform.”
About $2 billion will go toward compensating the more than 16 million affected consumer accounts, the CFPB said, adding that another $1.7 billion in penalties is earmarked for the agency’s Civil Penalty Fund and will be put toward relief for victims of consumer financial law violations.
In its statement, the CFPB said it found that Wells Fargo:
- Had systematic failures in its servicing of auto loans and unjustly repossessed borrowers’ vehicles.
- “Improperly denied thousands of mortgage loan modifications,” in some cases leading to customers losing their homes to unjust foreclosures.
- Unlawfully charged surprise overdraft fees on ATM withdrawals and debit card transactions.
- Illegally froze consumer bank accounts, leaving those customers unable to access their money for an average of at least two weeks.
Wells Fargo didn’t immediately respond to a request for comment made after normal business hours Tuesday, but in a statement on its website, CEO Charlie Scharf said the bank has been working with regulators to systematically rectify “unacceptable practices” at the company and remediate customers “where warranted.”
Scharf called the settlement “an important milestone in our work to transform the operating practices at Wells Fargo and to put these issues behind us” and said, “We have made significant progress over the last three years and are a different company today.”
The bank has for years been struggling with problems and facing clashes with regulators. In 2016, a fake-account scandal made headlines, and the bank has lost two CEOs since then.
Rohit Chopra, director of the CFPB, said Tuesday that “Over the past several years, Wells Fargo executives have taken steps to fix longstanding problems” but that the $3.7 billion payout “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.”
