Wells Fargo Now Facing $1 Billion in Civil Penalties over Consumer Fraud Issues
In what has emerged as one of the biggest consumer fraud issues of the last decade, federal regulators now want Wells Fargo & Co. to pay up to $1 billion in civil penalties in conjunction with the customer-account scandal that emerged in 2016—likely among the largest fines in financial services history.
Last year, the company admitted that there could be more than 3.5 million accounts affected by its fraudulent customer accounts scandal—a significant increase from the 2 million initially estimated. As reported, bank employees had opened accounts and/or requested insurance or residential mortgage services for customers who never requested them, garnering tens of millions of dollars in fees.
Settlements Already Paid
While regulators believe that most customers were hit by the scandal between January 2009 and September 2016, the scandal could in fact go back as far as May 2002, through mid-2017. Thus far, the company has paid out a $142 million settlement to address customer accounts; $185 million to resolve regulatory complaints; and $80 million to resolve five years of overbilling for approximately 570,000 auto-loan customers. The company has also agreed to provide $2.8 million refunds and credits on top of the total $3.3 million committed to those affected, and to make more than $400 million in scandal-related payments. It is estimated that the scandal could have affected 165 current and former banking customers.
New Consumer Fraud Lawsuit Filed
According to a new lawsuit filed last month by a former employee, the company is also being accused of closing accounts without investigation potential criminal activity, which is a legal mandate when a customer complains of fraud. As a result, customers—instead of the company—were allegedly left to absorb the costs of fraudulent activities, such as unauthorized withdrawals from their accounts. Not only does this cost customers, but it can also harm their credit.
Similar lawsuits have been filed by customers with the Consumer Financial Protection Bureau. Even the current administration has indicated that Wells Fargo won’t get off the hook for the scandal, as the Bureau is currently reviewing 14 open investigations on the bank. Specifically, it is looking into whether customers had been harmed by the bank closing and freezing accounts after customers detected signs of fraud. The company is claiming that it is standard practice to close accounts versus initiate an investigation when suspicious activity is detected.
Florida Consumer Protection Attorneys
The commercial litigation attorneys of Lavalle, Brown & Ronan, P.A. have been fighting for victims of consumer fraud for years. If your rights as a consumer have been violated and you are detecting fraud, contact a member of our team to find out how we can help.