Back in November, New Mexico Attorney General Hector Balderas threatened to sue Wells Fargo over the bank allegedly opening up thousands of fake accounts in the state’s residents' names, and now, Balderas is following through on that threat.
Balderas’ office announced recently that New Mexico is suing Wells Fargo for “illegal business practices in opening unauthorized accounts in the name of thousands of New Mexicans.”
The complaint, which was filed last week in New Mexico state court, alleges that Wells Fargo violated the New Mexico Unfair Trade Practices Act by “opening accounts without authorization of the consumer, enrolling consumers in unauthorized products and lying to consumers about the true status of their relationship with Wells Fargo.”
The lawsuit is just the latest in the ongoing fallout from Wells Fargo’s fake accounts scandal, which saw the bank being fined $185 million for more than 5,000 of the bank’s former employees opening more than 2 million potentially unauthorized accounts to get sales bonuses.
“Wells Fargo abused the trust placed in it by the State and citizens of the State of New Mexico, causing them significant harm. For some customers, their accounts were placed into collection,” New Mexico’s lawsuit states.
“For others, they were forced to fight with debt collection agencies for fees charged by Wells Fargo on the unauthorized accounts,” the lawsuit continues. “The citizens of this State have suffered as a result of Wells Fargo’s practices, which were exacerbated by the bank’s misrepresentations. Thousands of New Mexico citizens were victims of Wells Fargo’s fraudulent scheme.”
According to Balderas’ office, it’s estimated that Wells Fargo may have opened more than 20,000 New Mexico accounts without authorization.
“As the fiscal agent for the State, and a provider of banking services to thousands of New Mexicans, Wells Fargo has failed to resolve their violations of law,” Balderas said in a statement. “It’s deeply troubling that a company with this much at stake in our state would mislead New Mexico consumers and allow unlawful profiteering. We look forward to seeking justice in a court of law.”
Balderas’ office said that any funds recovered the lawsuit will be directed towards increasing financial literacy for students and at-risk families in the state. Victims of Wells Fargo’s actions are eligible to take part in a class action settlement that will see the bank pay out $142 million to affected customers, a fact noted by Wells Fargo.
“We remain focused on rebuilding trust and building a better bank. As a company, we have taken significant steps to make things right for our New Mexico customers, team members and communities,” Wells Fargo said in a statement provided to HousingWire.
“These steps include a nationwide class-action settlement agreement that sets aside $142 million for customer remediation and settlement expenses. We have also conducted broad outreach and worked directly with customers to resolve issues through our complaints process and free mediation services,” the bank continued.
“We have completed a review of retail banking accounts dating back to the beginning of 2009 to determine potentially unauthorized accounts and provide refunds and credits to those that incurred fees and charges. That includes our New Mexico customers. We continue to welcome – and encourage – customers with questions or concerns to contact us,” the bank added.
“Wells Fargo values strong, long-term customer and client relationships. Our more than 1,300 team members in New Mexico are committed to the success of our communities,” the bank concluded. “Our core business strategy is to help our customers succeed financially, and we are committed to helping our New Mexico customers reach their financial goals.
The lawsuit is just the latest in a string of black eyes for the bank.
Recently, the Department of Justice announced that Wells Fargo will pay more than $2 billion for allegedly lying about the quality of subprime and Alt-A mortgages that backed residential mortgage-backed securities in the run-up to the housing crisis.
The bank also recently revealed that an error in its mortgage underwriting software led to hundreds of improperly denied mortgage modifications and unnecessary foreclosures.
Prior to that, the bank agreed to pay $480 million to shareholders to settle class action suit over the bank’s fake account scandal.
And in April, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency announced a $1 billion fine for the bank over auto insurance and mortgage abuses.
Last year, Wells Fargo revealed that it was preparing to hand out $80 million in remediation for potentially wrongfully force-placing auto insurance on as many as 570,000 customers.
And the bank later disclosed that it agreed to pay $108 million to the federal government to settle allegations that the bank overcharged military veterans for refinances.