Wells Fargo settles account-scandal claims but runs afoul of federal regulator
Wells Fargo will pay $110 million to settle a class action lawsuit brought by US consumers over a scandal about fake accounts its employees set up for customers without their knowledge, writes Paybefore (Banking Technology‘s sister publication).
But the trouble continues for the financial institution, which has received a dim evaluation from a federal regulator.
Wells Fargo already has paid at least $190 million to regulators to settle claims arising from the scandal. Bank employees opened new checking, savings and credit card accounts, into which they shifted funds from existing accounts without consumers’ knowledge or permission – often racking up fees and other charges.
The new $110 million settlement stems from a class action claim over the bank’s retail sales practices filed in May 2015 in the Northern District of California, a case called Jabbari vs. Wells Fargo.
“The settlement class will consist of all persons who claim that Wells Fargo opened an account in their name without consent, enrolled them in a product or service without consent, or submitted an application for a product or service in their name without consent during the period from 1 January 2009, through the date the settlement agreement is executed,” according to Wells Fargo.
The bank says the settlement will resolve claims in 11 other pending cases related to the accounts scandal.
The settlement comes as the US Office of the Comptroller of the Currency (OCC) downgrades Wells Fargo in a measurement of lending. The bank was given a “needs to improve” rating on an evaluation conducted under the 1977 Community Reinvestment Act. The law was designed to encourage more lending in low-income areas. The federal regulator said that Wells Fargo had displayed an “extensive and pervasive pattern and practice of discriminatory and illegal credit practices across multiple lines of business within the bank, resulting in significant harm to large numbers of consumers.”
Earlier this month, the top Democrat on the US House Financial Services Committee, Rep. Maxine Waters, said she wants to interview executives from Wells Fargo about the matter.