Bank Regulation

Wells To Pay $575M Over Customer Abuse Claims

Wells Fargo Will Pay States $575 Million To Settle Customer Abuse Claims

Wells Fargo, implicated in a far-reaching banking scandal where it was accused of creating fake accounts and charging customers for services they didn’t sign up for, has agreed to pay $575 million to settle claims, according to reports.

Wells Fargo previously agreed to pay $190 million two years ago to settle federal claims, and it has settled other claims as well.

“This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank,” Chief Executive Officer Tim Sloan said in a statement to Reuters.

To prepare for the settlement expense, the bank put aside $400 million in the third quarter of 2018, and will pay the rest by the end of the year. Wells Fargo will also institute a customer restitution review program and refund customers who haven’t been contacted yet, as well as create a website explaining the programs.

California Attorney General Xavier Becerra chastised the bank for its behavior.

“Instead of safeguarding its customers Wells Fargo exploited them,” Becerra said in a statement. “This is an incredible breach of trust that threatens not only the customer who depended on Wells Fargo, but confidence in our banking system.”

Wells Fargo’s troubles are far from over. It faces an inquiry by the the U.S. Securities and Exchange Commission, the Department of Justice and the Department of Labor. So far, the fines have reached around $2 billion.

Earlier this month, the bank said it was firing three dozen district managers over the scandal. District managers generally oversee from five to 15 bank branches, and Wells Fargo said lawyers questioned dozens of managers about sales practices and human resources complaints.

In October, the bank said Chief Administrative Officer Hope Hardison and Chief Auditor David Julian were placed on leaves of absence and would no longer be members of the bank’s operating committee.

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