As part of a settlement with the Consumer Financial Protection Bureau, Wells Fargo will pay a total of $3.7 billion to remedy "widespread mishandling" of auto loans, mortgages, and deposit accounts (CFPB).
The Consumer Financial Protection Bureau and Wells Fargo announced a consent decree on Tuesday, requiring the bank to pay a $1.7 billion fine and restore $2 billion to millions of customers impacted by its alleged misdeeds. According to a press release from the Consumer Financial Protection Bureau, Wells Fargo unlawfully repossessed customer vehicles, improperly denied mortgage modifications that resulted in wrongful foreclosures, illegally charged surprise overdraft fees, and unlawfully froze customer accounts from at least 2011 to 2022.
The CFPB may still attempt to investigate misbehaviour by individuals, according to Chopra, and the consent decree does not release any claims for ongoing illegal activities or practises.
"We regard this as a starting step to provide relief to families who have had their automobiles illegally seized, who have had their accounts emptied by illegal trash fees, and who have had their accounts blocked without cause," he said.
The enforcement action caps out Chopra's stint as director of the Consumer Financial Protection Bureau, which has taken a radically different approach to issuing penalties than it did under President Donald Trump.
This year, the FDA punished Bank of America $225 million for delaying unemployment benefits during the pandemic, while Regions Bank was fined $191 million for charging unexpected overdraft fees. It has sued "serial offenders" such as MoneyGram and TransUnion for breaking consumer protection rules while also defending its funding mechanism in federal court. All of these harsh penalties are consistent with Chopra's prediction that the CFPB would become more tough.
Wells Fargo has had numerous run-ins with the Consumer Financial Protection Bureau, including:
In 2015, it was fined $24 million for an illegal mortgage kickback scheme; in 2016, it was fined $3.6 million for defrauding student loan borrowers; in 2017, it was fined $100 million for its fake accounts scandal; and in 2018, it was fined $1 billion for illegal fees and insurance practises in its auto and mortgage lending businesses.
According to the CFPB's ruling, Wells Fargo has already delivered $1.3 billion in remediation to more than 11 million auto loan customers since 2020, and the bank "has accelerated corrective actions and remediation, including to resolve these violations."
The CFPB terminated a 2016 consent order with Wells Fargo on student loan servicing and offered the bank with additional clarification on when its 2018 consent order on lending practises will expire, the bank said in a news release on Tuesday.
"We have made considerable progress over the last three years and are a different organisation today," said Wells Fargo CEO Charlie Scharf in a statement. "We are committed to doing the right thing for our customers and collaborating with our regulators and others to address any issues that arise."
The bank stated that it has modified its operations since 2019 by:
establishing four new enterprise functions "to improve governance and transparency";
Making substantial leadership changes, including the replacement of 12 of the 17 operating committee members and more than half of the executives directly below the operational committee;
Increasing risk management accountability in performance management and compensation processes; Improving its ability to identify and mitigate operational risks; Creating a new control management organisation and programme and
The establishment of a consumer practises office, which it describes as "an enterprise-wide, consumer-focused advisory group created to help guarantee the consumer's voice is heard in decision-making across the consumer product lifecycle."
The Department of Justice and the Securities and Exchange Commission fined Wells Fargo $3 billion for its bogus accounts scandal less than three years ago.
By fLEXI tEAM