02 Jan 2019
Wells Fargo has agreed to pay $575 million to 50 states and the District of Columbia over its fake bank accounts scandal and harmful mortgage charges.
The bank will also implement a consumer redress review program, where customers who have not been made whole through other restitution programs can seek a review for possible relief.
Among their findings, attorneys general allege the bank opened millions of unauthorised accounts and enrolled customers into online banking services without their knowledge or consent; improperly referred customers for enrolment in third party renters and life insurance policies.
The bank also allegedly improperly charged auto loan customers for force-placed and unnecessary collateral protection insurance, and failed to ensure customers received refunds of unearned premiums on certain optional auto finance products. In addition, they say it incorrectly charged customers for mortgage rate lock extension fees.
“The states also allege that Wells Fargo imposed aggressive and unrealistic sales goals on bank employees, implementing an incentive compensation program where employees could qualify for credit by selling certain products to customers,” said a statement from the Attorney General of Oklahoma, which will receive $2.64 million.
“The bank’s sales goals and the incentive compensation program created motivation for employees to engage in improper sales practices in order to satisfy sales goals and earn financial rewards. Those sales goals became increasingly harder to achieve over time, and employees who failed to meet them faced potential termination and career-hindering criticism from their supervisors.”
Wells Fargo CEO Tim Sloan said: “This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank.”
It said it will also provide periodic reports to the states on the progress of its existing remediation efforts.
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