Wells Fargo has agreed to pay $1.7 billion in fines and $2 billion in reparations to resolve allegations that it has been involved in widespread banking violations over the past decade, that have harmed millions of consumers, the Consumer Financial Protection Bureau said on Tuesday.
The bank has misused customer payments for car loans, wrongfully repossessed some borrowers’ cars and levied overdraft fees even when customers had enough money to cover purchases made with their bank cards, according to an order from the Consumer Protection Agency. Wells Fargo halted the behavior this year as part of a larger effort to eliminate other abusive practices dating back a decade, the filing said.
As part of the settlement with the regulator, Wells Fargo also repaid customers, refunded improperly charged fees and offered some financial relief to those whose finances and credit ratings were harmed by the bank’s practices. The damage is said to end up amounting to 2 billion dollars.
“This far-reaching agreement is an important milestone in our work to transform Wells Fargo’s operating practices and put these issues behind us,” Wells Fargo chief executive Charles Scharf said in a statement. Wells Fargo is “a different company today,” he added.
The fine also covers unreasonable mortgage and auto loan fees Wells Fargo has charged customers, as well as the bank’s practice of freezing and closing customer bank accounts too quickly when automated fraud detection systems indicated unusual activity. Some of the practices began as early as 2011, but nearly all went well beyond the bank’s initial squabbling with regulators over its widespread violations, which began in 2016.
“Wells Fargo’s unlawful flush-repeat cycle has harmed millions of American families,” Rohit Chopra, director of the Consumer Financial Protection Bureau, said in a statement. “This is an important first step in the accountability and long-term reform of this repeat offender.”