For a number of years, Wells Fargo has been plagued by scandal. Many Americans have had surprise overdraft fees, auto repossessions, foreclosures, and fake account openings because of the bank’s unethical practices. This is starting to catch up to them though, as the bank now has to pay billions of dollars in fines and restitution.
A recent settlement between federal regulators and Wells Fargo requires the bank to pay $1.7 billion in fines to the feds and over $2 billion in restitution to consumers. Since this was right around Christmastime, the bank may have been hoping we wouldn’t notice.
What Was Happening at Wells Fargo?
According to the official release from the Consumer Financial Protection Bureau, Wells Fargo repeatedly misapplied loan payments, wrongfully foreclosed on homes and illegally repossessed vehicles, incorrectly assessed fees and interest, charged surprise overdraft fees, and other illegal activity.
This affected over 16 million consumer accounts.
Consumers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank. Wells Fargo also charged consumers unlawful surprise overdraft fees and applied other incorrect charges to checking and savings accounts.
The CFPB made specific findings about Wells Fargo’s practices that have wreaked havoc on millions of Americans.
For auto loans, systemic failures in servicing auto loans resulted in $1.3 billion in harm across more than 11 million accounts. This included improper interest and fees, wrongful repossession, and incorrect application of borrower payments.
For mortgages, the bank improperly denied thousands of modifications. This led to wrongful foreclosures. It took years for Wells Fargo to address this issue.
Wells Fargo also illegally charged overdraft fees to customers who had positive balances in their accounts. Many consumers also had their accounts improperly frozen. This delayed access to the customer’s money for an average of over two weeks.
The CFPB has labeled Wells Fargo as a repeat offender for unlawful business practices. Other violations have included mortgage kickbacks, fake accounts, harmful auto loan practices, and faulty student loan servicing. (Sounds like Navient, to me).
Will This Solve the Problem?
$3.7 billion sounds like a lot of money. And it certainly is. But how much will this deter Wells Fargo from engaging in these practices moving forward?
In 2022, the bank had over $70 billion in revenue and $13.2 billion in earnings.
Could the fine and restitution simply be a “cost of business” to them? It wouldn’t surprise me.
I tend to take Clark Howard’s view on this topic. I am as much of a free market advocate as anybody. But Wells Fargo’s behavior is fraudulent and criminal. Things like this cannot be tolerated in a market economy.
Yet the company keeps on going! And no one from the company’s leadership goes to prison!
How long will it be until there are not only financial fines and restitution, but also individual accountability for creating such an abusive culture? I’m not holding my breath…
What Can We Do as Consumers?
If you’ve followed me for any length of time, you know that I reject the notion that we are a product of our circumstances and without recourse. We have agency in our lives and we can vote with our money.
So if Wells Fargo or any other large financial institution is not treating you properly, vote with your money and take it somewhere else. There are many other reputable institutions that are happy to have us as customers.
Regional banks and credit unions often have better customer support than megabanks. And their investment activity tends to stay within the local/regional community instead of going elsewhere.
Or you could go to an online bank like Ally. I often recommend them for the great high-yield savings account and bucket feature that comes with it. Their customer service is also very solid and they have tens of thousands of ATMs if you need cash.
The point is that we have the ability to say no to these practices. We can choose not to do business with banks that treat people like garbage.
As for me and my household, we will not do business with Wells Fargo unless and until they clean up their act.
Final Thoughts on the Wells Fargo Scandals
If you suffered harm from Wells Fargo’s unlawful and reprehensible business practices, make sure you get some of the restitution that is due to you. You may even want to reach out to the CFPB to see if you are eligible for further relief from the agency’s Civil Penalty Fund.
While there will always be bad actors out there, this does not mean we are stuck in our circumstances. You can have financial freedom by making wise choices starting today.
One of those choices may be leaving Wells Fargo once and for all. It may also be getting on a budget, powering through your debt, and building wealth for you and your family.
Whatever your goals are, you can accomplish them if you set your mind to make them happen.
To supercharge your financial freedom journey, book your free Discovery Session with me today. Let’s talk about what you want to accomplish and how I can help you do it.
