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Wells Fargo to Pay $3.7B as Part of CFPB Agreement

The Consumer Financial Protection Bureau [1] (CFPB) has reached a final agreement with Wells Fargo [2] who has been ordered to pay $3.7 billion for the widespread and systemic abuse of customers through misapplied loan payments, wrongfully seized homes and vehicles, adding extraneous fees or incorrectly applying interest rates which resulted in losses for over 16 million consumer accounts. 

The total judgement amount consists of a $1.7 billion civil fine and $2 billion to consumers hurt by Wells Fargo. The fine will go to the CFPB’s Civil Penalty Fund, where it will be used to provide relief to victims of consumer financial law violations. Of the $2 billion in restitution, $1.3 billion will go toward auto lending accounts, $500 million for deposit accounts, and $200 million for mortgage accounts. 

“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” said CFPB Director Rohit Chopra [3]. “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’s specific findings include that Wells Fargo: 

The agreement also forces Wells Fargo to immediately stop charging surprise overdraft fees and ensure that the unused portion of GAP insurance contracts is refunded to the borrower when a loan is paid off or otherwise terminates prematurely. 

The CFPB also calls Wells Fargo a “repeat offender” as they have been the subject of multiple enforcement actions in the past for other violations including faulty student loan servicing, mortgage kickbacks, fake accounts, and harmful auto loan practices. 

In a prepared statement issued after the deal was announced, Wells Fargo said that current leadership has made “significant progress to transform Wells Fargo.” 

“As we have said before, we and our regulators have identified a series of unacceptable practices that we have been working systematically to change and provide customer remediation where warranted. This far-reaching agreement is an important milestone in our work to transform the operating practices at Wells Fargo and to put these issues behind us,” said Charlie Scharf [4], Wells Fargo’s Chief Executive Officer. “Our top priority is to continue to build a risk and control infrastructure that reflects the size and complexity of Wells Fargo and run the company in a more controlled, disciplined way.” 

“We have made significant progress over the last three years and are a different company today,” Scharf said. “We remain committed to doing the right thing for our customers and working closely with our regulators and others to deal appropriately with any issue that arises.” 

Click here [5] to read the official order.