Wells Fargo has reached a $3.7 billion agreement with federal regulators over allegations that it harmed millions of customers through consumer law violations.
Wells Fargo was ordered by the Consumer Financial Protection Bureau to repay $2 billion to consumers and was slapped with a whopping $1.7 billion fine, the largest financial penalty ever against a bank by the CFPB.
The fine was levied over accusations that Wells Fargo charged customers illegal interest and fees on auto and home loans. The agency also said that Wells Fargo illegally repossessed the vehicles of some consumers and incorrectly applied overdraft fees on savings and checking accounts.
“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.”
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The bank’s “illegal activity” affected some 16 million customers, the CFPB said.
CEO Charles Scharf said in a statement that the $2.7 billion agreement is part of a push to “transform operating practices at Wells Fargo and to put these issues behind us.”
Wells Fargo executives, led by CEO Charles Scharf, have been working to pull the bank from a mire of scandals dating back years. Last year, the bank was slapped with a $250 million fine for mishandling oversight of home mortgages.
Also last year, Wells Fargo reached a $37.3 million settlement with the Justice Department over accusations that it overcharged hundreds of customers who used its foreign exchange services.
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Wells Fargo is still struggling to recover from a scandal, first flagged by regulators in 2016, in which employees secretly created millions of bank and credit card accounts unbeknownst to the customers involved. The bank ended up firing thousands of employees during the fallout and reached a $3 billion settlement with the DOJ over the matter.
