Wells Fargo ordered to pay $3.7 billion for 'illegal activity,' including mismanaging accounts: Thousands of customers lost their vehicles and homes due to the bank's activity over the course of several years

Just The News ^ | 12/20/2022 | Madeleine Hubbard

[SeekAndFind]

Federal regulators on Tuesday ordered Wells Fargo Bank to pay a $1.7 billion civil penalty and more than $2 billion in compensation to customers for what they say was "illegal activity affecting over 16 million consumer accounts."

The Consumer Financial Protection Bureau said Wells Fargo "repeatedly misapplied loan payments, wrongfully foreclosed on homes and illegally repossessed vehicles, incorrectly assessed fees and interest, charged surprise overdraft fees," among other things.

Thousands of customers lost their vehicles and homes due to the bank's activity over the course of several years, the federal regulators said.

The $1.7 billion fine will go to the watchdog's Civil Penalty Fund to provide relief to victims.

Protection Bureau Director Rohit Chopra said Wells Fargo is a "repeat offender" and that the bank's "rinse-repeat cycle of violating the law has harmed millions of American families."

In 2016, the Protection Bureau levied a $100 million fine against Wells Fargo, which was the agency's largest fine ever at the time.

[SeekAndFind]

More via the CFPB:

According to today’s enforcement action, Wells Fargo harmed millions of consumers over a period of several years, with violations across many of the bank’s largest product lines. The CFPB’s specific findings include that Wells Fargo:

• Unlawfully repossessed vehicles and bungled borrower accounts: Wells Fargo had systematic failures in its servicing of automobile loans that resulted in $1.3 billion in harm across more than 11 million accounts. The bank incorrectly applied borrowers’ payments, improperly charged fees and interest, and wrongfully repossessed borrowers’ vehicles. In addition, the bank failed to ensure that borrowers received a refund for certain fees on add-on products when a loan ended early.
• Improperly denied mortgage modifications: During at least a seven-year period, the bank improperly denied thousands of mortgage loan modifications, which in some cases led to Wells Fargo customers losing their homes to wrongful foreclosures. The bank was aware of the problem for years before it ultimately addressed the issue.
• Illegally charged surprise overdraft fees: For years, Wells Fargo unfairly charged surprise overdraft fees - fees charged even though consumers had enough money in their account to cover the transaction at the time the bank authorized it - on debit card transactions and ATM withdrawals. As early as 2015, the CFPB, as well as other federal regulators, including the Federal Reserve, began cautioning financial institutions against this practice, known as authorized positive fees.
• Unlawfully froze consumer accounts and mispresented fee waivers: The bank froze more than 1 million consumer accounts based on a faulty automated filter’s determination that there may have been a fraudulent deposit, even when it could have taken other actions that would have not harmed customers. Customers affected by these account freezes were unable to access any of their money in accounts at the bank for an average of at least two weeks. The bank also made deceptive claims as to the availability of waivers for a monthly service fee.

Wells Fargo is a repeat offender that has been the subject of multiple enforcement actions by the CFPB and other regulators for violations across its lines of business, including faulty student loan servicing, mortgage kickbacks, fake accounts, and harmful auto loan practices.

Enforcement action

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating federal consumer financial laws, including by engaging in unfair, deceptive, or abusive acts or practices. The CFPB’s investigation found that Wells Fargo violated the Act’s prohibition on unfair and deceptive acts and practices.

The CFPB order requires Wells Fargo to:

• Provide more than $2 billion in redress to consumers: Wells Fargo will be required to pay redress totaling more than $2 billion to harmed customers. These payments represent refunds of wrongful fees and other charges and compensation for a variety of harms such as frozen bank accounts, illegally repossessed vehicles, and wrongfully foreclosed homes. Specifically, Wells Fargo will have to pay:
  • More than $1.3 billion in consumer redress for affected auto lending accounts.
  • More than $500 million in consumer redress for affected deposit accounts, including $205 million for illegal surprise overdraft fees.
  • Nearly $200 million in consumer redress for affected mortgage servicing accounts.
• Stop charging surprise overdraft fees: Wells Fargo may not charge overdraft fees for deposit accounts when the consumer had available funds at the time of a purchase or other debit transaction, but then subsequently had a negative balance once the transaction settled. Surprise overdraft fees have been a recurring issue for consumers who can neither reasonably anticipate nor take steps to avoid them.
• Ensure auto loan borrowers receive refunds for certain add-on fees: Wells Fargo must ensure that the unused portion of GAP contracts, a type of debt cancellation contract that covers the remaining amount of the borrower’s auto loan in the case of a major accident or theft, is refunded to the borrower when a loan is paid off or otherwise terminates early.
• Pay $1.7 billion in penalties: Wells Fargo will pay a $1.7 billion penalty to the CFPB, which will be deposited into the CFPB’s victims relief fund.

Read today’s order.

[Leaning Right]

Dumb old Wells Fargo could have avoided this entire mess by putting Hunter Biden on its board of directors. Too late now.

[T.B. Yoits]

Wells Fargo is a crime syndicate that the U.S. government allows to operate.

They needed to be shut down once they got caught opening accounts in users' names without the users' knowledge.

https://www.creditinfocenter.com/wells-fargo-secretly-opened-unauthorized-accounts-need-know/

[G Larry]

What percentage of this $3.7B will be funneled to the DNC?

Following the 2008 financial collapse and the fining of financial institutions there was ZERO accountability of the BILLIONS in fines collected.

Bambi knows!

[PghBaldy]

Isn’t this the monstrosity Liz Warren pushed for?

[Colt1851Navy]

The crooked federal government looking down their noses at another bunch of thieves. Speechless

[Fido969]

They made 78 billion last year. They’ll write this check out of petty cash.

[thegagline]

Illegally repossessing motor vehicles is an euphemism for grand theft.

[William Tell]

I had a Wells Fargo checking account years ago.

I wrote a check for my home mortgage to a second bank that erroneously credited somebody else’s account and even credited them for a lesser amount.

A third bank was used to move the check from the mortgage holding bank to Wells Fargo but they did not notice that the check amount did not match the transaction amount.

The error came to my attention when I received a delinquency letter from my mortgage holder saying that I made no payment.

When I went to Wells Fargo they were able to identify the errors but said there was nothing they could do. I told them, “So, if I just close my account right now I will be ahead by more than five hundred dollars?” Suddenly they were more interested.

I closed my account a short time later.

[SunkenCiv]

Y'know, 'cuz the gubmint is all about concern for the American people, which is why it used the Plannedemic to destroy the banking system along with commercial enterprises of all other kinds.

[Osage Orange]

I banked with WF...many years ago. Hated them...and never went back.

[torqemada]

So, people lost their homes and cars, but the government gets the money to spend on DNC campaigns. Who the hell makes the victims in this disaster whole again? Every dime of he money should be paid to Wells Fargo victims of fraud.

[MeganC]

If the fines are less than the profits then they will keep doing this.

[pierrem15]

Wells Fargo is a crime syndicate that the U.S. government allows to operate.

Yup. In the credit card fraud cases they prosecuted some lower level employees of course and ignored the execs who put the perverse incentives in place that caused the problem and who collected the bonuses.

Just like Boeing, where some low level engineers and a test pilot have been indicted instead of the execs who pushed the 737Max out knowing they had not properly built or tested the aircraft.

That's how American "capitalism" works now: a license to steal (and sometimes to kill) for the guys at the top while we get bottomless taxes, draconian punishments and depressed wages.

[Carl Vehse]

What?! No public flogging of Wells Fargo executives and BOD members?!?

At least they should be forced to fake an apology.

[Baldwin]

Now starts the second part of the grift. The part where the lawyers collect millions while the “victims” receive pennies on the dollar.

[Alberta's Child]

I’m no fan of Wells Fargo, but I would never take the CFPB at face value about anything.

[Jimmy Valentine]

Fines are not enough. People need to go to jail.

[sauropod]

I remember how they acted when i used to have a small consumer loan through them.

Never again.