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The fourth-largest bank in the country, Wells Fargo, has reached a settlement in an ongoing lawsuit filed by the U.S. Consumer Financial Protection Bureau. The bank will pay $3.7 billion — $1.7 billion will be paid in government fees, and more than $2 billion will go directly to customers — due to multiple alleged customer abuses.
Government regulators say Wells Fargo charge billions in “illegally assessed fees and interest charges,” which led to some pretty awful circumstances — misapplied payments, surprise overdrafts, and even unnecessary car repossessions.
Are you owed some of this money? How and when will you receive it? Details are still emerging, but we’ll share everything we know about this massive Wells Fargo settlement.
Eleven million Wells Fargo auto loan customers will receive $118 on average.
The CFPB says Wells Fargo had “systematic failures” with their auto loans, resulting in $1.3 billion of “harm” that affected 11 million accounts. The way Wells Fargo-handled auto loans and loan payments created widespread problems with charging interest, giving promised refunds, and even erroneously repossessing cars.
So $1.3 billion out of the $2 billion going to customers will be given to the customers with those 11 million accounts. While these payouts will be given on a case-by-case basis, on average, these accounts would receive $118.
Deposit account holders will be paid more than $500 million for surprise overdraft fees and other errors.
More than half a billion dollars will be paid out to deposit account holders — including $205 million for “illegal surprise overdraft fees” that had been charged for years, according to the CFPB. The bank reportedly authorized transactions, only to charge overdraft fees later.
Customers also saw their accounts frozen for an average of two weeks due to a “faulty automated filter’s determination that there may have been a fraudulent deposit.” These funds help pay for that damage.
Wells Fargo mortgage customers will receive nearly $200 million in the settlement.
The government says Wells Fargo “improperly denied thousands of mortgage loan modifications,” even years after they knew it was a problem. This led to some customers losing their homes due to unnecessary foreclosures.
Nearly $200 million of the settlement funds will go to customers who experienced these loan errors, denials, and foreclosures.
If past settlements are any indication, affected customers will receive settlement money in mid-2023.
There’s no official deadline given for when these funds will be sent to customers, but we have clues based on similar settlements.
When Regions Bank reached a settlement with the government, the bank credited refunds directly to the affected accounts, or if their accounts were closed, they mailed checks to the address on file. Chances are, the same payout methods will happen this time around, too.
Customers who were part of another Wells Fargo class action settlement got their payouts via check mailed to them in mid-2020. The lawsuit concluded in November 2019, so if this settlement follows the same time frame, customers will expect payouts sometime in mid-2023.
For now, there’s nothing you have to do — but if you have questions about the settlement, call the CFPB at (855) 411-2372.
Wells Fargo has been called a ‘repeat offender’ by the government.
According to the official statement by the CFPB, “Wells Fargo … has been the subject 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.”
The CFPB invites anyone who is experiencing “ongoing problems” with Wells Fargo — or any other bank, for that matter — to submit complaints via the CFPB website, or by calling (855) 411-2372.
This settlement comes as Wells Fargo finishes paying out their last class action lawsuit.
Wells Fargo is finishing up paying out a $32.5 million lawsuit to their employees over allegedly mismanaging the company’s 401(k) plan. The deadline for receiving compensation from that lawsuit has passed, and Wells Fargo didn’t admit to any wrongdoing.
The settlement also comes on the heels of two other high-profile bank settlements: Regions Bank’s $141 million settlement with their customers for illegal overdraft fees and fall 2022’s massive Capital One data breach settlement.
