Wells Fargo, the embattled national bank, is reportedly refunding tens of millions of dollars for a range of products, including pet insurance and legal services.
According to a report in The Wall Street Journal that cites people familiar with the matter, Wells Fargo is making the refunds for adding services to thousands of customers' accounts without the customers fully understanding what they were getting. For years, Wells Fargo charged monthly fees for dozens of products – known in the industry as "add-on products" – that the customers didn't understand or know how to use, noted the paper.
People familiar with the matter told WSJ that the Consumer Financial Protection Bureau (CFPB) is investigating the incident and is looking into whether customers were tricked and whether they had the ability to cancel the services. Wells Fargo is “reviewing add-on products sold to consumers by the bank or its service providers, and if issues are found during this review, we will make things right with customers in the form of refunds or remediation,” said Catherine Pulley, a spokesperson for Wells Fargo. She added that the bank is “working with our regulators on the ongoing review.”
The report comes as Wells Fargo disclosed late last week that it took a $619 million charge in the second quarter of the year to cover refunds to customers that were overcharged by its foreign exchange, wealth management and auto and mortgage lending businesses. In April, the bank settled with the CFPB and the Office of the Comptroller of the Currency, getting slapped with a $1 billion fine for its lack of risk management. In what was seen as an unprecedented move by the Federal Reserve back in February, it announced it was placing a cap on the size of Wells Fargo's balance sheet due to a lack of risk management practices. And in August, Wells Fargo said in a Securities and Exchange Commission (SEC) filing that it was looking into add-on products, including identity theft and debt protection products.