Today, the Consumer Financial Protection Bureau (CFPB) released details of a Consent Order they reached with Wells Fargo Bank, N.A. in which Wells Fargo is ordered to pay “more than $2 billion in redress to consumers and a $1.7 billion civil penalty for legal violations across several of its largest product lines.” According to a press release issued by the CFPB, Wells Fargo’s “..illegal conduct led to billions of dollars in financial harm to its customers and, for thousands of customers, the loss of their vehicles and homes.” Rohit Chopra, the Director of the Consumer Financial Protection Bureau, stated “Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families”.
The CFPB order requires Wells Fargo to:
- Provide more than $2 billion in redress to consumers: Wells Fargo will be required to pay redress totaling more than $2 billion to harmed customers. These payments represent refunds of wrongful fees and other charges and compensation for a variety of harms such as frozen bank accounts, illegally repossessed vehicles, and wrongfully foreclosed homes. Specifically, Wells Fargo will have to pay:
- More than $1.3 billion in consumer redress for affected auto lending accounts.
- More than $500 million in consumer redress for affected deposit accounts, including $205 million for illegal surprise overdraft fees.
- Nearly $200 million in consumer redress for affected mortgage servicing accounts.
- Stop charging surprise overdraft fees: Wells Fargo may not charge overdraft fees for deposit accounts when the consumer had available funds at the time of a purchase or other debit transaction, but then subsequently had a negative balance once the transaction settled. Surprise overdraft fees have been a recurring issue for consumers who can neither reasonably anticipate nor take steps to avoid them.
- Ensure auto loan borrowers receive refunds for certain add-on fees: Wells Fargo must ensure that the unused portion of GAP contracts, a type of debt cancellation contract that covers the remaining amount of the borrower’s auto loan in the case of a major accident or theft, is refunded to the borrower when a loan is paid off or otherwise terminates early.
- Pay $1.7 billion in penalties: Wells Fargo will pay a $1.7 billion penalty to the CFPB, which will be deposited into the CFPB’s victims relief fund.
To get more information on the CFPB victims relief fund, click here.
Wells Fargo employees who are aware of other illegal activity are encouraged to send information about what they know to whistleblower@cfpb.gov.
