Wells Fargo will fork over $575 million in a settlement with attorneys general from all 50 states and the District of Columbia investigating its banking practices, the company said. Those practices include phony accounts and manipulative sales practices.
The agreement, announced on Friday by the San Francisco-based bank and Iowa’s attorney general, “settles a range of allegations that have roiled the bank and its customers for years, including the 2016 revelation that employees had opened millions of fake bank accounts to meet sales quotas,” according to CBS News. “The settlement also covers a host of other improper practices involving insurance, auto loans, mortgages and financing.”
“This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank,” said Wells Fargo CEO Tim Sloan, said in a statement.
Sloan’s statement continued also explained that the bank has been engaged with its federal regulators to address these issues and is remediating affected customers.
Under the terms of the agreement, Wells Fargo will:
* Pay a total of $575 million to resolve civil claims that the state Attorneys General otherwise might bring arising out of or related to the covered conduct prior to the effective date of the agreement.
* Maintain designated teams to review and respond to customer inquiries on the covered issues.
* Create and maintain a website that describes the issues and Wells Fargo’s existing remediation efforts, and identifies contact information for consumers to utilize if they have any questions or concerns about the covered issues.
* Wells Fargo will also provide periodic reports to the states on the progress of its existing remediation efforts.
As of the end of third quarter 2018 the company had accrued $400 million of the settlement amount and expects to accrue the remaining $175 million in fourth quarter 2018.
Attorney General Gurbir S. Grewal announced that New Jersey is among the states joining a settlement agreement with Wells Fargo Bank that resolves allegations the company engaged in a variety of sales, lending, and other improper business practices for more than a decade.
Under the settlement terms New Jersey will receive nearly $17 million. Wells Fargo’s total payment under the agreement is approximately $575 million, including distributions to other states, attorneys’ fees, and other payments.
As Grewal’s office noted in a press release, the alleged consumer protection violations in Wells Fargo’s sales, auto-lending, and mortgage-lending practices include (1) opening millions of unauthorized accounts and enrolling customers into online banking services without their knowledge or consent, (2) improperly referring customers for enrollment in third-party renters and life insurance policies, (3) improperly charging auto loan customers for force-placed and unnecessary collateral protection insurance, (4) failing to ensure that customers received refunds of unearned premiums on certain optional auto finance products, and (5) incorrectly charging customers for mortgage rate-lock extension fees.
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