Wells Fargo agrees to $3.7 billion federal settlement for alleged consumer abuses
Improperly repossessing cars. Erroneously denying mortgage loan modifications. Wrongfully freezing or closing customers' accounts.
Those are some of the infractions allegedly committed by Wells Fargo that has led the bank to agree to a $3.7 billion settlement with the Consumer Financial Protection Bureau.
The settlement, announced Tuesday morning, was described by the agency as merely another step in addressing long-running harms alleged against the Sioux Falls, South Dakota-based financial institution. More than 16 million consumers were affected from 2011 to 2022, it said.
“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” CFPB Director Rohit Chopra said in a statement. “The CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country. This is an important initial step for accountability and long-term reform of this repeat offender.”
The settlement includes a $1.7 billion penalty and approximately $2 billion in restitution.
In a statement, the bank said its current leadership had made "significant progress in transforming Wells Fargo," and that the required actions related to many of the issues described in the settlement "are already substantially complete."
“As we have said before, we and our regulators have identified a series of unacceptable practices that we have been working systematically to change and provide customer remediation where warranted," Wells Fargo CEO Charlie Scharf said. "This far-reaching agreement is an important milestone in our work to transform the operating practices at Wells Fargo and to put these issues behind us. Our top priority is to continue to build a risk and control infrastructure that reflects the size and complexity of Wells Fargo and run the company in a more controlled, disciplined way.”
But in a tweet Tuesday following the settlement announcement, Chopra pushed back on those assertions.
"We remain concerned that the bank’s product launches and growth initiatives to increase profits have delayed needed reform," he said.
Wells Fargo has been the target of regulators since at least 2011, when reports of its strategy to cross-sell multiple products to customers first emerged. In 2020, it paid $3 billion to settle criminal charges and a civil action brought by the U.S. Securities and Exchange Commission. Its former CEO, John Stumpf, agreed to a lifetime ban from the financial industry; another CEO, Tim Sloan, stepped down after the Federal Reserve capped the size of Wells Fargo’s assets.