NEW YORK, N.Y. – Wells Fargo agreed Friday to a $575 million settlement with the Attorneys General of all 50 U.S. states and the District of Columbia, to resolve claims it violated each state’s consumer protection laws.
As part of the total settlement, West Virginia will receive $1,652,275.25 and Ohio will receive $2,974,953.32.
Investigators and state Attorneys General allege that, between 2002 and 2016, Wells Fargo implemented a program which paid bonuses to Wells Fargo Community Bank employees who sold financial products to customers.
Prosecutors say those incentives led Wells Fargo Community Bank employees to submit applications on behalf of millions of customers, without their knowledge or consent, for life insurance and renter’s insurance policies, checking, savings, credit card and debit card accounts, and online banking and online bill pay.
During the same time span, Wells Fargo’s auto loan division allegedly placed approximately 850,000 auto loan customers under force-placed Collateral Protection Insurance (CPI), which charged them additional monthly premiums for auto insurance coverage if Wells Fargo – and the third party company that serviced its auto loans – could not verify the customer had purchased their own auto insurance policy for the vehicle.
If a customer could not pay the monthly auto loan payment and the monthly CPI premium within a certain period of time, Wells Fargo would repossess the customer’s vehicle.
Prosecutors say Wells Fargo, and the third-party company who managed the auto loans, did not properly verify whether customers already had auto insurance, and did not process CPI cancellations in a timely manner, resulting in more than 51,000 vehicles being repossessed between 2005 and 2016.
As part of Friday’s settlement agreement, Wells Fargo agreed to repay affected auto loan customers a total of more than $385 million.
Additionally, investigators found that, between 2013 and 2017, Wells Fargo improperly charged over 110,000 home mortgage loan customers a Rate Lock Extension Fee, which gives borrowers the ability to lock-in a fixed interest rate for their home loan while the loan is still pending.
According to Wells Fargo’s policy at the time, the Rate Lock Extension Fee was charged to customers if their home loan did not close during the rate lock period defined in the loan contract. However, if Wells Fargo caused the delay in closing the loan, its policy stated it would extend the rate lock period without charging the fee.
However, investigators discovered that the affected customers were charged the Rate Lock Extension Fee, even though the delay in closing their home loans was the fault of Wells Fargo.
In Friday’s settlement agreement, Wells Fargo agreed to refund those affected customers a total of more than $100 million.
Wells Fargo has been ordered to set up a dedicated website and phone number by Feb. 26, 2019, for its affected banking, insurance, auto loan and home mortgage customers to file claims for refunds in this settlement.
You can read a copy of Friday’s entire settlement at the link titled “Wells Fargo Settlement Agreement – Dec. 28.2018” in the “Related Links” section of this story.