Wells Fargo to Pay $3.7 Billion for Harming Consumers

Consumer Bureau notes the bank mismanaged mortgage and auto loans and engaged in illegal activity on deposit accounts

Wells Fargo will refund billions of dollars to consumers as well as pay a hefty fine as a result of repeated illegal activity related to the big bank's handling of consumer accounts, including mortgages, auto loans, and deposit accounts.

The Consumer Financial Protection Bureau (CFPB) made the announcement today and noted that the fine assessed ($1.7 billion) is a result of Wells Fargo's unwillingness to take corrective action after years of harms to consumers.

“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” said CFPB Director Rohit Chopra. “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 noted that the misconduct by Wells Fargo impacted some 16 million consumers over a period of years.

Consumers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank. Wells Fargo also charged consumers unlawful surprise overdraft fees and applied other incorrect charges to checking and savings accounts.

Wells Fargo will pay consumers $2 billion in refunds and will also pay a $1.7 billion civil penalty as a result of the enforcement action.

Consumer advocates were quick to cheer the news that one of the nation's largest banks will finally be held accountable for wrongdoing.

“This is not the first time that Wells Fargo has flagrantly violated the law and harmed consumers across its lines of business, including deposit accounts, credit cards, and student loan servicing,” said Rachel Gittleman, Financial Services Outreach Manager at Consumer Federation of America. “Today’s enforcement action illustrates the need for an independent consumer protection agency armed with the resources and tools needed to hold violators of the law accountable, make harmed consumers whole again, and protect the public from future unfair, deceptive, or abusive acts or practices.”

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