State Attorney General Xavier Becerra ended 2018 with a big win for California residents who were deceived by Wells Fargo Bank.
On Friday, December 28, Becerra joined 49 other states and Washington, D.C., in a $575 million nationwide settlement with Wells Fargo because of the institution’s systematic misconduct exploiting its own customers. In the process, Becerra successfully recovered $148.7 million for California.
The settlement resolved multistate investigations into Wells Fargo’s repeated misconduct which spanned more than a decade. The misconduct concerned its sales practices, mortgage rate-lock fees, and add-on products on auto loans. During this time, Wells Fargo opened unauthorized accounts and enrolled customers in bank products to meet aggressive sales goals, as result of extreme management pressure, threat of job loss for branch employees, and an abusive company culture.
The bank opened more than 3.5 million unauthorized accounts and enrolled 528,000 customers in online bill pay based on improper sales practices. Wells Fargo also enrolled some consumers in renter and life-insurance policies that the consumer never authorized. From 2005 to 2016, Wells Fargo added collateral protection insurance or delayed cancellation of such insurance on millions of auto loans.
The institution has acknowledged it opened millions of deposits, credit card, and other accounts, and conducted transfers of funds without customer authorization over various periods beginning in 2002 through 2017.
“Wells Fargo customers entrusted their bank with their livelihood, their dreams, and their savings for the future,” Becerra said. “Instead of safeguarding its customers, Wells Fargo exploited them, signing them up for products—from bank accounts to insurance—that they never wanted. This is an incredible breach of trust that threatens not only the customers who depended on Wells Fargo, but confidence in our banking system. As our investigation found, Wells Fargo’s conduct was unlawful and disgraceful.”
According to Becerra, customers received compensation through remediation and oversight by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, class action lawsuits, and bank efforts to make refunds to customers.
Through this settlement, Becerra noted, “Wells Fargo will also create a consumer redress review program where consumers who have not been made whole through other restitution programs can seek review of their complaint by a bank escalation team for possible relief.” The settlement will be documented through the entry of a stipulated judgment, which remains subject to court approval. The stipulated judgement is available for review online at oag.ca.gov/system/files/attachments/press-docs/conformed-stipulated-judgment.pdf.