Wells Fargo to pay $575 million to settle allegations of fraudulent conduct

By Amanda Klein | December 28, 2018

A multi-million dollar settlement between Wells Fargo Bank and attorney generals from all fifty states was reached Friday over claims that the bank opened unauthorized checking accounts and a string of other irregularities.

Attorney General Josh Shapiro said the bank will pay $575 million to resolve the claims, with $16.5 million going into the Pennsylvania Treasury.

Wells Fargo “opened millions of accounts for customers who didn’t know about them, charged auto finance customers for insurance policies they didn’t want or need, and charged mortgage customers over $100 million in unwarranted fees,” Shapiro said in a prepared statement. “With this settlement, we are holding Wells Fargo accountable and changing corporate conduct to protect consumers.”

The bank will be forced to pay a sum of money to consumers who were harmed – though that amount is confidential under the terms of the settlement.

According to Shapiro, unrealistic sales goals set by bank management led to some of the fraudulent activity. These sales goals and incentive compensation created an impetus for employees to engage in improper sales practices in order to earn financial rewards. Those goals became increasingly difficult to achieve over time and employees who failed to meet them faced potential termination and career-hindering criticism from their supervisors.

Wells Fargo has identified more than 3.5 million accounts where customer accounts were opened, funds were transferred, credit card applications were filed, or debit cards were issued without the customers’ knowledge or consent. The bank has also identified 528,000 online bill pay enrollments nationwide that may have resulted from improper sales practices at the bank.

The bank previously agreed to pay $2.3 billion in related settlements and consent orders for similar fraudulent conduct.

Wells Fargo will create and maintain a website for consumers to use to access the program and will provide periodic reports to the states about ongoing restitution efforts.

More information on the redress review program, including Wells Fargo escalation phone numbers and the dedicated website address for the program, will be available on or before Feb. 26.

Amanda Klein can be contacted at amanda.klein@grantstreetnews.com

 

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