Wells Fargo to pay $110 million settlement over accounts scandal
By April Kirstin Chua
US bank Wells Fargo has agreed to pay $110 million as settlement for the 11 class-action lawsuits brought by customers who had accounts opened without their permission. This comes after the company was fined $185 million in September 2016 for illegally opening around two million accounts.
When approved, the settlement will provide payouts to all Wells Fargo customers victimized by the bank's malpractices from 2009 until today. The payments are on top of the money received by the customers last year with the Los Angeles city attorney's office and federal regulators, according to the Los Angeles Times. America's biggest bank has already refunded 180,000 account holders, although it is not clear how many individual customers that represent.
Wells Fargo's new president and CEO Tim Sloan said the agreement is another step in the company's journey to make things right with customers and rebuild trust.
"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," he added in a statement reported by BBC. Meanwhile, last September's fine on Wells Fargo was imposed by the US Consumer Financial Protection Bureau after an investigation found its sales practices.
As per the investigation, Wells Fargo illegally signed up customers for deposit and credit card accounts to meet sales targets.
The customers did not want the sign-up nor know that they had. Wells Fargo also saw a slowdown in its customer business for the previous months due to the numerous scandals it has been involved with. Credit card applications were, reportedly, down 53 percent in February while customers opened 40 percent fewer checking accounts.
Regulators are going after the bank for its other bad practices. In a separate announcement on Tuesday, Wells Fargo said the Office of the Comptroller of the Currency downgraded its rating. The OCC explained that the downgrade was because of numerous regulatory actions that include settlement over the fake accounts scandal.
The class action lawsuit was filed last May 2015 by Shahriar Jabbari and Kaylee Heffelfinger alleging among others that Wells Fargo regularly opened unauthorized accounts. Wells Fargo, on the other hand, expects the settlement to resolve claims in other 11 pending class action lawsuits.