Wells Fargo increases fake account class action settlement to $142 million
$32 million addition covers accounts fraudulently opened as far back as 2002
Last month, Wells Fargo announced that it agreed to a $110 million settlement in a class action lawsuit brought on behalf of the bank’s customers who had a fake account opened in their name.
The settlement came as part of the fallout from the bank’s fake account scandal, which involved more than 5,000 of the bank’s former employees opening up as many as 2 million potentially unauthorized accounts to get sales bonuses and led to a $185 million fine from the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the city and county of Los Angeles.
The $110 million settlement covered anyone who had an account opened in their name without their consent, enrolled them in a product or service without consent, or submitted an application for a product or service in their name without consent stretching back to Jan. 1, 2009, through the date the settlement is finalized.
But Wells Fargo announced Friday that it is expanding both the size of the settlement and the time period the settlement covers by an additional seven years.
According to an announcement from Wells Fargo, the settlement is being expanded by $32 million to $142 million, and now covers anyone who had a fake account opened in their name all the way back to 2002.
The bank said in its announcement that the settlement now covers “any customers who were impacted by sales practice issues as early as May 2002.”
In its announcement, the bank said that the expansion of the settlement is due in part to the results of its internal investigation, which the bank released earlier this month.
“The expansion of this agreement is another important step to make things right for our customers,” Tim Sloan, Wells Fargo’s president and chief executive officer, said.
“On our journey to rebuild trust, we want to ensure our customers feel confident that we have heard their concerns about retail sales practices, which includes offering them numerous opportunities for remediation,” Sloan continued. “We encourage any customer with concerns or questions about their accounts to contact us.”
According to the bank, the settlement class is now all customers who claim that Wells Fargo opened an account in their name without consent, enrolled them in a product or service without consent, or submitted an application for a product or service in their name without consent during the period from May 1, 2002, through April 20, 2017.
The bank said that it is continuing to pursue remediation efforts for customers who may have been impacted by sales practice issues.
“The company is working directly with customers to resolve issues through its complaints process,” the bank said. “In addition, if Wells Fargo is unable to resolve issues directly, customers who believe they received a product or service they did not want or authorize are offered a free mediation service with an independent third-party mediator.”
As with the previous settlement announcement, the bank said that it expects this settlement to resolve claims in 11 other pending class actions that unauthorized accounts were opened in customers’ names or that customers were enrolled in products or services without their consent.
According to the bank, if the settlement is approved by the court, the $142 million settlement (minus attorneys’ fees and costs of administration) will provide three forms of compensation for settlement class members: reimbursement of fees incurred, compensation for damage to credit caused by the opening of unauthorized accounts at Wells Fargo, and after repayment of fee damages and credit impact damages, additional compensation paid from the net settlement fund.
Here’s how the settlement payout will work, according to the bank:
Customers who were charged fees in connection with unused, unauthorized accounts from January 1, 2009, through April 20, 2017, will be eligible to receive fee reimbursement in the amount of the actual fees they were charged as determined by the settlement administrator.
If a customer was charged fees related to an unauthorized account from May 1, 2002, through December 31, 2008, he or she will receive a flat-rate fee reimbursement that will be based on the average of fees paid out to those who file claims for the Jan. 1, 2009 – April 20, 2017 period.
The bank also said that this settlement is in addition to other remediation efforts that Wells Fargo continues to pursue in relation to the fake account situation.
According to the bank, to date, Wells Fargo refunded approximately $3.2 million to customers under the stipulated judgment with the Los Angeles City Attorney and the CFPB and OCC consent orders, covering the period 2011 to 2016.
“To make things right with customers who were impacted by sales practices issues, Wells Fargo also is conducting its own voluntary review of accounts from 2009 – 2010 to determine and remediate any customer harm,” the bank added.