Daily Management Review

Wells Fargo To Pay $575 Million To Settle Violation Of Customer Protection Laws


Wells Fargo To Pay $575 Million To Settle Violation Of Customer Protection Laws
According to an announcement made by Iowa Attorney General Tom Miller, settlement of the allegations against the US banker Wells Fargo that it had violated the consumer protection laws of the state would be made by the bank against a payment of $575 million. This settlement is a part of a major settlement agreement by the bank with consumers who reside in all of the 50 states and the District of Columbia.
The attorney general's office said in a statement that a consumer restitution review program would also be created by the US bank. Those consumers who feel that dissatisfied through restitution programs already in place and claim that they have not been adequately compensated could ask for a review of the decision by a bank escalation team.
This controversy surrounding Wells Fargo was first revealed in 2016 when it was brought to light that the employees of the bank had used fraudulent means to open millions of fake accounts in the name of people some of who were not even customers of the bank so that they are able to meet sales goals and since then the US bank has faced severe criticism and scrutiny.
According to the attorney general's office, the allegations for which the bank has agreed to come to a settlement include charges that the bank’s employees had opened up millions of unauthorized accounts and had also enrolled customers into online banking services without informing them in any way and neither taking any consent form them. Authorities also charged Wells Fargo of referring customers for enrolment in third-party renters and life insurance policies in an improper manner. The bank was also charged of engaging in charging its auto loan customers for force-placed and unnecessary collateral protection insurance also in an improper manner. The bank authorities are failed to make sure that its customers got the refunds of unearned premiums on some optional auto finance products. And lastly, it was also alleged that the bank had also incorrectly charged customers for mortgage rate lock extension fees. The settlement agreement is to address all of these charges against the bank.
"This agreement is unique and one of the largest multi-state settlements with a bank since the National Mortgage Settlement in 2012," Miller said. "This significant dollar amount, on top of actions by federal regulators, holds Wells Fargo accountable for its practices."
The US Federal Reserve had in February of this year issued ordered that Wells Fargo would be prevented from growing total assets beyond their levels at the end of 2017 till such time that the bank was able to convince the Fed that it had implemented the suggested reforms. That measure by the Fed was termed by some analysts to be a "shocking penalty".
It was almost two years ago that the bank had agreed to pay $190 million as amounts for settlement of the claims of creation of phony customer accounts by the bank as brought in by the federal government. Since that time, the bank has been imposed penalties worth more than $2 billion as the bank was also charged with other controversial policies and functioning in almost all of its business lines.