Wells Fargo, which has been under close scrutiny for improper or illegal business practices since at least 2016, was fined $3.7 billion by the Consumer Financial Protection Bureau as of Tuesday. press release.
“Wells Fargo’s cycle of purging and repeat breaking the law has harmed millions of American families,” CFPB executive director Rohit Chopra said in a statement.
Created in the aftermath of the 2007-2008 financial crisis, the CFPB aims to protect customers from improper treatment by financial institutions.
“This is an important first step towards long-term accountability and reform for this repeat offender,” Chopra added.
Wells Fargo has paid nearly $20 billion in regulatory fees since 2007 for harming consumers or investors, per The New York Times. In 2016 it is paid $185 million in revelations that his employees had opened accounts in different accounts without customer consent, and in 2018 the Federal Reserve Board ordered the bank not to grow larger than its assets in late 2017 until it “sufficiently improves its governance and controls.”
That order from the Federal Reserve Board is still in effect. It was thought at the time that it would only last a year or maybe two, according to CBS News. The CFPB described Wells Fargo as a “multiple offender” and cited regulatory action it has undergone student loan payments and bribes for mortgages.
“Simply put, Wells Fargo is a corporate repeat offender that puts one in three Americans at risk for potential harm,” Chopra said during a press call Tuesday to announce the fines, which cover practices dating back to at least 2011.
This latest regulatory action relates to violations and improper business practices. The CFPB said Wells Fargo charged “illegitimate” overdrafts to customers, applied improper fees and interest charges to home and auto loans, falsely repossessed cars and “falsely denied thousands of mortgage loan changes,” some cases led to people losing their homes.
The “systematic failures” in auto loans alone have hurt more than 11 million accounts, the agency said.
The bank also “unlawfully” froze consumers’ bank accounts for an average of at least two weeks while assuming, often incorrectly, that a deposit was fraudulent.
As part of the agreement, a total of $2 billion from Wells Fargo will go to duped customers in a variety of ways, including a $205 million pot for people who the agency says have been charged surprise overdraft fees.
Also, as part of this agreement, the bank “may not charge overdraft fees for deposit accounts where the consumer had funds available at the time of a purchase or other debit transaction, but subsequently had a negative balance after the transaction was settled,” according to the CFPB. said.
The other $1.7 billion is a civil fine that will go to the CFPB’s Civil Penalty Fund, “where it will be used to provide assistance to victims of consumer financial law violations,” the agency wrote.
All in all, the money will be returned to more than 16 million customers, the agency said.
And there could be more on the horizon.
This enforcement action “should not be read as a sign that Wells Fargo has put its long-standing problems behind it or that the CFPB work is done here,” he said during Tuesday’s press call, according to the New York Times.
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