It’s been a rough couple years for Wells Fargo as scandal after scandal is revealed.
The bank has also faced numerous fines, including one for $1 billion from the Consumer Financial Protection Bureau. The CFPB announced a settlement with Wells Fargo in a coordinated action with the Office of the Comptroller of the Currency.
The bank’s troubles began back in 2016 when it was discovered that the bank’s former employees opened as many as 2.1 million accounts without authorization in order to get sales bonuses.
But that was only the beginning. Scandals discovered since then have only brought more problems for Wells Fargo and several states have ceased to do business with the bank.
Now, Wells Fargo has announced a $575 million settlement with all 50 state attorneys general and the attorney general for the District of Columbia regarding previously disclosed retail sales practices, auto collateral protection insurance and guaranteed asset/auto protection, and mortgage interest rate lock matters.
“This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank,” said Tim Sloan, Wells Fargo president and CEO.
Under the terms of the agreement, Wells Fargo will:
- Pay a total of $575 million to resolve civil claims that the state attorneys general otherwise might bring arising out of or related to the covered conduct prior to the effective date of the agreement.
- Maintain designated teams to review and respond to customer inquiries on the covered issues.
- Create and maintain a website that describes the issues and Wells Fargo’s existing remediation efforts, and identifies contact information for consumers to utilize if they have any questions or concerns about the covered issues.
Wells Fargo also announced it will provide periodic reports to the states on the progress of its existing remediation efforts.
California Attorney General Xavier Becerra announced that the state, which is where Wells Fargo is headquartered, recovered $148.7 million of the settlement.
“Wells Fargo customers entrusted their bank with their livelihood, their dreams, and their savings for the future,” Becerra said. “Instead of safeguarding its customers, Wells Fargo exploited them, signing them up for products – from bank accounts to insurance – that they never wanted.”
“This is an incredible breach of trust that threatens not only the customers who depended on Wells Fargo, but confidence in our banking system,” he said. “As our investigation found, Wells Fargo’s conduct was unlawful and disgraceful.”
As of the end of third quarter 2018 the company had accrued $400 million of the settlement amount and expects to accrue the remaining $175 million in fourth quarter 2018.
The settlement will be documented through the entry of a stipulated judgment, which remains subject to court approval.