Wells Fargo has been ordered to pay $3.7 billion to settle claims it harmed consumers by charging illegal fees and interest.
The banking giant was ordered by the Consumer Financial Protection Bureau to pay $2 billion in redress to wronged customers and $1.7 billion in civil penalties.
Consumers 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, according to the Consumer Financial Protection Bureau. Wells Fargo also charged consumers unlawful surprise overdraft fees and applied other incorrect charges to checking and savings accounts.
More than 16 million customers were reportedly affected by these actions.
"Wells Fargo's rinse-repeat cycle of violating the law has harmed millions of American families," CFPB Director Rohit Chopra said in a statement. "The CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country. This is an important initial step for accountability and long-term reform of this repeat offender."
The settlement is the largest fine against the bank, which has spent years trying to rehab its image following past scandals.
"We and our regulators have identified a series of unacceptable practices that we have been working systematically to change and provide customer remediation where warranted. This far-reaching agreement is an important milestone in our work to transform the operating practices at Wells Fargo and to put these issues behind us," Charlie Scharf, Wells Fargo CEO, said in a statement. "We have made significant progress over the last three years and are a different company today."
Mina Taurus, CEO of Tadrus Capital, tells KNX In-Depth he believes that while the issues are not isolated to Wells Fargo, they seem to have a more pervasive case that starts at the top.
His solution? Pursue criminal charges.
Taurus says for some banks, If the penalties are low and the rewards are high, it's worth taking the risk.
And when it comes to keeping your money safe, Mina suggests maybe going with one of the many other banking options out there - one with better reviews. He also agrees with diversifying where you keep your money, including cash on hand.
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