Wells Fargo is Paying $575 Million to Settle Fake Account Claims

If you’ve been following the Wells Fargo scandals over the past two years you know that the bank is facing a number of lawsuits and investigations. On Friday, Wells Fargo agreed to pay a $575 million lawsuit settlement to all 50 states and Washington, D.C.

Wells Fargo Scandals

Wells Fargo has been in the center of a number of scandals in recent years. The scandal that has received the most coverage has been the fact that the bank has opened fake accounts in customer’s names. To mend their relationships with its customers, Wells Fargo has issued a settlement agreement.

After admitting that its employees had opened as many as 3.5 million fake accounts without customers’ consent, a series of probes have been launched to figure out what is going on within the walls of the bank. The probes have uncovered a wide variety of problems within the company.

The $575 million agreement follows a number of other settlements Wells Fargo has paid out since September of 2016.

Just last April two federal regulators fined Wells Fargo $1 billion for forcing some of its customers into car insurance. The bank was also fined for charging unfair fees to mortgage borrowers.

One month later, Wells Fargo agreed to pay $480 million for a separate matter. Investors alleged the bank made misstatements and omitted information about its sales practices, which brought about a securities lawsuit.

In October of 2018, the bank paid another $65 million penalty to the state of New York. This penalty was also related to the fake account scandal.

The Latest Wells Fargo Lawsuit Settlement

As part of its latest agreement with the United States government, Wells Fargo will be creating a website and designated team to help with remediation efforts.

“This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank,” Wells Fargo CEO Tim Sloan said.

However, the bank remains under restrictions that have been imposed by the Federal Reserve until February 2019. Until the Fed has decided Wells Fargo can be trusted again, the company cannot grow any larger than it was at the end of 2017 ($2 trillion in assets).

Each state will be receiving a certain dollar amount from the $575 million settlement. California, where Wells Fargo got its start, is slated to receive more than a quarter of the settlement funds. This is because more Wells Fargo customers live there than most other states. Other states will receive lesser amounts. New Jersey, for instance, will be given $17 million to settle any wrongdoing customers in the state may have fallen victim to.

This is just the latest in the two(going on three)-year-long dispute with Wells Fargo. It will be interesting to see how many more large settlements the bank will have to pay out in the next 12 months.

Readers, do you bank with Wells Fargo? Have you received any settlement cash? 

Photo: Mike Mozart

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