The Consumer Financial Protection Bureau fined Wells Fargo $3.7 billion for consumer auto and mortgage lending violations. Announced Dec. 20, that amount includes more than $2 billion to be paid to consumers along with a $1.7 billion civil penalty.
According to the CFPB, Wells Fargo improperly rejected thousands of mortgage loan modifications over seven years and charged surprise overdraft fees on debit card transactions and ATM withdrawals despite customers having enough money to cover the transaction. The CFPB found that Wells Fargo also improperly froze more than 1 million consumer accounts after an automated filter misjudged legitimate deposits.
According to the CFPB, Wells Fargo’s “systemic failures in its servicing of automobile loans” cost consumers $1.3 billion.
“The bank’s illegal conduct led to billions of dollars in financial harm to its customers, and for thousands of customers, the loss of their vehicles and homes,” the CFPB stated. “Customers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank. Wells Fargo also charged consumers unlawful surprise overdraft fees and applied other incorrect charges to checking and savings accounts.”
The fine comes as Wells Fargo attempts to recover from numerous scandals over the last decade. In 2018, the CFPB fined Wells Fargo $1 billion after finding that the bank violated the Consumer Financial Protection Act in its administration of a mandatory auto loan insurance program. In 2016, the CFPB fined the bank $100 million for opening millions of unauthorized deposit and credit card accounts.
According to CNBC, a high-level investigation blamed a “sales-oriented culture or a decentralized corporate structure” that “unfortunately coalesced and failed dramatically.” In early 2020, the U.S. government banned former CEO John Stumpf from working at a bank in connection with the scandal.