Wells Fargo Bank has been penalized by the Consumer Financial Protection Bureau for widespread mismanagement of customer accounts, reports Financial Advisor.
The CFPB said the bank was responsible for illegal activity over a period of several years that affected over 16 million auto loans, mortgages and deposit accounts. Wells Fargo was ordered to pay a total of $3.7 billion that included a $1.7 billion civil penalty and over $2 billion in compensation to customers.
According to the CFPB, “consumers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank.” The bureau also said Wells Fargo unlawfully froze bank accounts and charged surprise overdraft fees.
Officials said the bank’s violations caused thousands of customers to lose their homes and vehicles.
“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.”
The bureau noted that Wells Fargo has been the subject of multiple enforcement actions for violations in its business practices.
The $1.7 billion penalty will go to the CFPB’s Civil Penalty Fund, where it will be used to provide relief to victims of consumer financial law violations. The bank was also ordered to stop charging surprise overdraft fees, and ensure that auto loan borrowers receive refunds for certain add-on fees.
Wells Fargo did not admit guilt in the settlement, but the company’s CEO said it was a milestone in the company’s efforts to transform its operating practices and “put these issues behind us.”
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