Wells Fargo has agreed to pay $2 billion to customers it harmed by mismanaging their auto and home loans, as well as pay an additional $1.7 billion civil penalty, the Consumer Financial Protection Bureau (CFPB) said today.
The CFPB found the bank harmed millions of customers over a period of several years, in particular those who had automobile and mortgage loans with Wells Fargo. The bank incorrectly applied borrowers’ automobile payments, improperly charged fees and interest, and wrongfully repossessed borrowers’ cars, the CFPB said, negatively affecting more than 11 million accounts. Additionally, Wells Fargo denied thousands of customers certain modifications to their mortgage loans, causing some to lose their homes due to wrongful foreclosures. The CFPB investigation also found Wells Fargo unfairly charged customers surprise overdraft fees, and froze more than 1 million bank accounts based on faulty information.
“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” CFPB director Rohit Chopra said in a statement. “The CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country. This is an important initial step for accountability and long-term reform of this repeat offender.”
The CFPB penalty, which is the largest in the agency’s history, comes four years after it issued Wells Fargo a $1 billion fine for mishandling a mandatory auto insurance program, and overcharging certain borrowers mortgage fees.
The bank, which is headquartered in San Francisco, has come under scrutiny in recent years for patterns of consumer fraud. Wells Fargo agreed to pay the Justice Department $3 billion in 2020 over allegations it pressured employees to meet unrealistic sales goals, leading them to create fake accounts under customers’ names without their knowledge. This practice stretched from 2002 to 2016. In an October earnings report Wells Fargo said it had set aside $2 billion to resolve legal and regulatory issues.