Los Angeles City Attorney Mike Feuer recently announced that his office has reached a settlement with Wells Fargo, the nation’s third largest bank, in litigation alleging the bank opened thousands of accounts without customers’ consent, failed to apprise customers the accounts had been opened and improperly charged customers fees.
Wells Fargo is required to provide restitution to affected customers and pay $50 million in civil penalties, the largest such payment in the history of the Los Angeles City Attorney’s office. The fines will be used for future consumer protection efforts.
Feuer’s announcement coincided with announcements from federal agencies that they also resolved claims against Wells Fargo. The Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) issued consent orders to the bank. Both federal agencies require Wells Fargo to change sales practices and implement more internal oversight. Both agencies also required Wells Fargo to pay penalties, including $100 million to the CFPB and $35 million to the OCC.
“This is a major victory for consumers,” Feuer said. “Consumers must be able to trust their banks. They should never be taken advantage of by their banks. We’re holding Wells Fargo accountable and assuring the violations we’ve alleged never happen in the future. This extraordinary resolution sends a strong message to big banks,”
Feuer’s office sued Wells Fargo in May 2015 over allegations of unauthorized accounts. After filing the lawsuit, the city attorney received more than 1,000 phone calls and emails from customers and current and former Wells Fargo employees about the issues raised in the litigation.
The settlement between the city attorney and the bank establishes a complaint and mediation system for California consumers harmed by the bank’s alleged practices, and requires Wells Fargo to continue a restitution program for affected customers. Wells Fargo must also alert all of its California customers who have consumer or small business checking and savings accounts, credit cards or unsecured lines of credit that they should consider visiting their local bank branch or call Wells Fargo to review their accounts, close accounts or discontinue services they do not want.
The settlement also stipulates that every six months for the next two years, Wells Fargo must provide audit reports to the city attorney assessing the bank’s compliance with the agreement, verified under penalty of perjury by an officer or director of the bank.
“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” said CFPB director Richard Cordray.
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