The(CFPB) has ordered Wells Fargo Bank   to pay more than $2 billion in consumer redress and a $1.7 billion civil penalty for breaking the law across several of its main product lines. Due to the bank’s illegal actions, its clients suffered financial losses totaling billions of dollars as well as the loss of thousands of homes and automobiles. Customers had their automobiles wrongfully repossessed, fees and interest rates on auto and mortgage loans were improperly levied to them, and the bank misapplied their payments to these loans. Additionally, Wells Fargo imposed various erroneous charges to checking and savings accounts in addition to illegally charging customers surprise overdraft fees.

According to the terms of the decision, Wells Fargo must compensate the over 16 million affected consumer accounts and pay a $1.7 billion fine to the Consumer Financial Protection Bureau (CFPB), which will be used to help those who have been harmed by violations of consumer financial laws.

Wells Fargo (NYSE: WFC) is one of the nation’s largest banks serving households across the country. It offers a variety of consumer financial services, including mortgages, auto loans, savings and checking accounts, and online banking services.

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.

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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 measure

According to the Consumer Finance Protection Act, the Consumer Financial Protection Bureau (CFPB) is authorized to take legal action against institutions that disobey federal consumer financial rules, including those that engage in unfair, misleading, or abusive conduct or practices. According to the CFPB’s inquiry, Wells Fargo engaged in unfair and deceptive acts and practices, which are prohibited under the Act.

According to the CFPB order, Wells Fargo must:

• 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.

They made almost 75 billion last year. For perspective, say they stole $75 bucks (again), and their punishment is giving $4 bucks back. They should be disbanded. Their leaders jailed.

– William Scot Grey (@wscotgrey) December 20, 2022

Great but this is like finding a normal person $5. Until the bankers start going to prison, nothing will change. They made 4 billion this month.

– Jasun (@ThatOtherJasun) December 20, 2022

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