Wells Fargo to pay $3.7B for ‘widespread mismanagement’ of consumer accounts News
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Wells Fargo to pay $3.7B for ‘widespread mismanagement’ of consumer accounts

The Consumer Financial Protection Bureau (CFPB) Tuesday ordered Wells Fargo to pay $3.7 billion regarding its “widespread mismanagement” affecting over 16 million consumer accounts. Specifically, Wells Fargo must pay $2 billion to consumers in addition to a $1.7 billion civil penalty which will be put into the CFPB’s Civil Penalty Fund to compensate victims of federal consumer financial law violations. 

The CFPB’s civil penalties against Wells Fargo stem from illegal conduct regarding its auto loans, mortgages and deposit accounts which occurred over the last few years. CFPB Director Rohit Chopra stated, “Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families.” Chopra added that Tuesday’s announcement is “an important initial step for accountability and long-term reform.”

Wells Fargo released a statement which addresses the settlement’s resolution and reiterates its “significant progress in strengthening its risk and control infrastructure.” Wells Fargo CEO and President Charles Scharf stated the company’s intent “to transform the operating practices at Wells Fargo and to put these issues behind us.”

The CFPB refers to Wells Fargo as a “repeat offender” as a recipient of multiple enforcement actions by the CFPB and other regulators for violations across its lines of business, including faulty student loan servicing, mortgage kickbacks, fake accounts, and harmful auto loan practices. Additionally, Wells Fargo settled money-laundering charges for $7 million with the US Securities and Exchange Commission in May 2022.

The settlement affected Wells Fargo stock (WFC) which today reflected an approximate 2.0 percent decrease.