The Consumer Financial Protection Bureau played the role of all three ghosts in “A Christmas Carol” yesterday, attempting to get Wells Fargo to see the error of its ways, but also assessing $3.7 billion in an enforcement action related to “widespread mismanagement” that led to illegally repossessing cars and consumers losing their homes while also charging “surprise” overdraft fees and unlawfully freezing consumer accounts. When people look up the phrase “kit and kaboodle” going forward, this enforcement action might be Exhibit A.
A copy of the enforcement order — which is not as page-turning as Dickens’s classic, but still a good read — can be accessed by clicking here.
The $3.7 billion breaks down into $2 billion of restitution to consumers and a fine of $1.7 billion. It is the largest fine ever assessed by the CFPB. The $2 billion will be spread across 16 million affected accounts. The bank has also agreed to a number of other steps, such as no longer charging overdraft fees when the consumer had available funds at the time of the transaction but did not have them when the transaction actually settled.
“This far-reaching agreement is an important milestone in our work to transform the operating practices at Wells Fargo and to put these issues behind us,” said Charlie Scharf, Wells Fargo’s Chief Executive Officer, in a statement. Wells has been working for years to clean up its image after a scandal in 2016 that revealed employees of the bank opened millions of fake accounts in the name of actual customers.
Rohit Chopra, the Director of the CFPB, did not mince words during a call announcing the enforcement action.
“Put simply, Wells Fargo is a corporate recidivist that puts one third of American households at risk of harm,” Chopra said. “Finding a permanent resolution to this bank’s pattern of unlawful behavior is a top priority.”
The activities covered in the enforcement action go back as far as 2011, and accuse the bank of assessing illegal fees and interest on mortgages and auto loans, misapplying payments made by customers on their auto loans and mortgages, and incorrectly charging fees on customers’ checking and savings accounts.
