Wells Fargo has been ordered to pay $3.7 billion in fines and refunds by the Consumer Financial Protection Bureau (CFPB) due to bad banking practices. Up to 16 million customers are eligible for compensation, with the bank agreeing to pay $2 billion to consumers and a $1.7 billion fine. The compensation amount varies based on the situation, with automobile repossession compensation being at least $4,000 and mortgage holders getting an average of $24,12, as per a report by The US Sun on January 20, 2023.
The CFPB has discovered multiple violations by Wells Fargo, including incorrectly applied overdraft fees, illegal fees and interest on loans, unlawfully repossessing vehicles, improperly denying mortgage modifications, and unlawfully freezing customer accounts. The bank was aware of the issues for years before addressing them, and illegal overdraft fees have been happening since 2015, according to the Consumer Financial Protection Bureau on December 20, 2022.
CFPB Director Rohit Chopra said that Wells Fargo’s repeated violations of the law have harmed millions of American families. According to Wells Fargo CEO Charles Scharf, this marks an “important milestone” in the bank’s efforts to “change” its processes. In 2016, several employees were found to have illegally opened millions of accounts to try and meet sales goals. The Federal Reserve placed an order on Wells Fargo to prevent it from growing any larger until the ongoing problems have been resolved, which was initially expected to last only a year or two when it was first enacted in 2018 but remains in place, according to The US Sun.