Wells Fago has come to a settlement agreement with customers whose personal information their staff used to set up fake bank and credit card accounts. With this announcement, Wells gets one — rather expensive — step closer to putting the incident in the rearview mirror.
The latest payout comes after Wells had already been dinged with $185 million in fines and penalties for the 2 million or so deposit and card accounts Wells Fargo employees set up for customers without their permission. The bank has also made some changes to prevent future incidents of this kind — its sales incentive structure has been modified so that creating fake accounts is no longer the best way to get ahead and fired (or demoted) the five main players who had served as senior managers in the consumer business. John Stumpf, the CEO of Wells Fargo at the time the scandal broke, also resigned.
The deal, announced Tuesday by the bank and in a court filing, brings a close to the dozens of lawsuits filed across the country. To go through, a judge must finalize the agreement.
“We want to ensure that each customer impacted by our sales practices issue has every opportunity for remediation, and this agreement presents an additional option,” Wells Fargo Chief Executive Officer Tim Sloan said in a statement. “We continue to encourage customers to contact us directly so that we can act quickly to refund fees and address any concerns.”
Federal officials, notably, are still taking shots at Wells.
On Tuesday, the Office of the Comptroller of the Currency accused Wells Fargo of an “extensive and pervasive pattern” of discriminatory and illegal lending practices for years. Notably, most of the cases referred to by the OCC had already been announced, and in some cases were over a decade old.
Nonetheless, the OCC lowered its overall score of Wells Fargo’s compliance with community banking laws to “needs to improve.”
“We are disappointed with this rating given Wells Fargo’s strong track record of lending to, investing in and providing service to low- and moderate-income communities,” Sloan said in a separate statement. “However, we are committed to addressing the OCC’s concerns because restoring trust in Wells Fargo and building a better bank for our customers and our communities is our top priority.”
The settlement of the consumer class-action case comes after Wells Fargo faced a near total meltdown from legislators when it tried to avoid the courts entirely — and instead tried to push individual litigants in the case into closed-door arbitration.
“The $110 million settlement, if approved, will require Wells Fargo to repay the fees charged to class members by Wells Fargo for unauthorized accounts, and provide millions of dollars of additional monetary relief to the class,” Derek Loeser, a lawyer for the plaintiffs, said in the statement. “We believe this is an outstanding result obtained for the benefit of a proposed nationwide class, notwithstanding Wells Fargo’s effort to block the class action with an arbitration clause.”
A federal panel of jurists is slated on Thursday to consider whether all consumer cases against the bank should be consolidated before a single judge.