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Federal regulators fined Wells Fargo $1.7 billion on Tuesday for “widespread mismanagementOver several years, this harmed over 16 million consumer accounts.
The Consumer Financial Protection Bureau said Wells Fargo’s “illegal activity” included repeatedly apply loan repaymentswrongfully seizing homes, illegally repossessing vehicles, incorrectly assess fees and interest and charge surprise overdraft fees.
The CFPB ordered Wells Fargo to pay the $1.7 billion civil penalty in addition to more than $2 billion to compensate consumers for a series of “unlawful activities.”
The misconduct described by the CFPB echoes previously reported revelations that have emerged about Wells Fargo since 2016 when the bank’s fake account scandal created a national firestorm.
“Wells Fargo’s rinse-repeat cycle of breaking the law has hurt millions of American families,” CFPB director Rohit Chopra said in a statement.
Chopra described Wells Fargo as a “repeat offender” and said Tuesday’s fine was just a “first step” in holding the bank accountable. That suggests Wells Fargo may not be coming out of the penalty box with regulators anytime soon.
The misconduct described by the CFPB echoes previously reported revelations that have emerged about Wells Fargo since 2016, when the bank’s fake account scandal created a national firestorm.
In a statement, Wells Fargo noted that the far-reaching agreement with the CFPB resolves several issues, most of which have been “outstanding for several years.” The bank said the required actions are “already substantially complete.”
“We and our regulators have identified a series of unacceptable practices that we have worked systematically to change and provide corrective action to customers where warranted,” Wells Fargo CEO Charlie Scharf said in the statement. “This far-reaching agreement is an important step in our work to transform Wells Fargo’s operating practices and put these issues behind us.”
Wells Fargo said it expects the CFPB settlement to cost it $3.5 billion before tax in the fourth quarter.
According to the CFPB enforcement action, Wells Fargo experienced “systemic failures” in its auto lending business that affected more than 11 million accounts. These failures have caused Wells Fargo to wrongfully repossess some borrowers’ vehicles, improperly charge fees and interest, and fail to reimburse certain fees, according to regulators.
Additionally, regulators say Wells Fargo wrongly declined thousands of mortgage modifications, causing some customers to lose their homes in “wrongful foreclosures.”
“The bank had been aware of the problem for years before finally addressing the issue,” the CFPB said.
Wells Fargo also “illegally” charged surprise overdraft fees and “illegally” froze more than one million consumer accounts, preventing consumers from accessing their funds for at least two weeks on average.
The Wells Fargo scandal that began in 2016 drew attention to Wells Fargo’s treatment of employees and customers, triggering congressional hearings, countless regulatory investigations, and the eventual ousting of two bank CEOs.
In her final act as Federal Reserve Chair, Janet Yellen in February 2018 threw the book at Wells Fargo By imposing unprecedented sanctions on the bank that remains in place today.
The CFPB said the more than $2 billion in customer refunds Wells Fargo has been ordered to pay include more than $1.3 billion for harming consumers through the bank’s auto lending tactics and more than 500 million for illegal overdraft charges and other custodial account misconduct.
Regulators said Wells Fargo was also ordered to pay nearly $200 million in refunds to people harmed by the bank’s mortgage servicing accounts.
Going forward, Wells Fargo has been ordered by the CFPB to ensure auto loan borrowers receive reimbursement for certain additional fees and to stop charging bank account holders surprise overdraft fees.
The agency said the fee is imposed when customers have funds available at the time of purchase, but then had a negative balance after the transaction settled.
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