A federal regulator on Tuesday ordered Wells Fargo Bank to pay a $1.7 billion civil penalty and more than $2 billion in compensation to customers for what the government called the bank’s multiyear scheme of "illegal activity affecting over 16 million consumer accounts."
The Consumer Financial Protection Bureau (CFPB) said Wells Fargo "repeatedly misapplied loan payments, wrongfully foreclosed on homes and illegally repossessed vehicles, incorrectly assessed fees and interest, charged surprise overdraft fees” and unlawfully froze bank accounts, among other things.
Thousands of customers lost their vehicles and homes as a result of the bank's activity over the course of several years, the bureau said.
The bank has been ordered to pay more than $2 billion in redress to consumers, while the additional $1.7 billion fine goes to the CFPB’s civil penalty fund to provide relief to other victims of fraud.
The CFPB’s director, Rohit Chopra, called Wells Fargo a "repeat offender" and said the bank's "rinse-repeat cycle of violating the law has harmed millions of American families."
The bank “has been the subject of multiple enforcement actions by the CFPB and other regulators for violations across its lines of business, including faulty student loan servicing, mortgage kickbacks, fake accounts and harmful auto loan practices," the regulator said.
Wells Fargo was not required to admit guilt in its $3.7 billion settlement. In a statement, CEO Charlie Scharf said the settlement marks an “important milestone in our work to transform the operating practices of Wells Fargo and to put these issues behind us.”
The bank said that “the CFPB recognized that since 2020, the company has accelerated corrective actions and remediation, including to address the matters covered by today’s settlement.”
The bank settled with the Securities and Exchange Commission and federal regulators for a total of $3 billion in 2020 for opening fake accounts and selling unnecessary products to unknowing customers as part of an aggressive cross-selling strategy targeting existing customers.