The customers affected by Well’s Fargo’s account creation scandal have come to a settlement agreement with the bank, and a federal judge has offered preliminary approval for the deal.
Wells Fargo will settle the class action lawsuit to a tune of $142 million, according to a recent NPR news article. The bank noted that individual compensation will depend on the actual financial harms customers suffered from the false accounts opened in their names. A customer hit with an improper $35 overdraft fee, for example, will be entitled to less in settlement funds that a customer who saw his credit score damaged so much he was forced to pay higher interest rates on loans.
Determining which customers receive compensation — as well as how much and why — will be handled by specialist class action lawyers brought in by Wells Fargo. The bank said it may end up paying more than $142 million if that sum turns out to be insufficient to compensate affected customers.
“We are pleased that the court found the settlement to be fair, reasonable and adequate,” said Tim Sloan, CEO of Wells Fargo. “This preliminary approval is a major milestone in our efforts to make things right for our customers.” Sloan added that the settlement is “fundamental to restoring trust.”
The settlement offer will end “substantially all claims” in 10 other pending class action cases, according to Wells Fargo.
The lawsuit stems from a consumer banking scandal in which a high-pressure Wells Fargo sales culture pushed employees to open millions of unauthorized checking and credit card accounts in customers’ names. Former employees have told NPR their jobs were threatened if they didn’t meet aggressive sales goals, and that many employees were pushed out or fired for not meeting sales quotas. Some former workers say they were fired from the bank after calling the institution’s ethics line to report widespread fraud in their branches.
In a statement to NPR, Wells Fargo said it was “disturbing to hear claims of retaliation against team members who contacted the ethics line.” The bank said it is investigating these claims and is in the process of restructuring its ethics and oversight systems.