Wells Fargo hopes this is the last shoe to fall in the Phony Accounts scandal unearthed in 2016. The company recently agreed to a $575 million settlement with all 50 state attorneys general over violations of state consumer protection laws tied to the opening of unauthorized bank accounts and unwanted insurance policies in its clients’ names.
Without ever admitting or denying fault, the company has now paid out over $2 billion in fines, damages and penalties over the same set of facts. Included in this settlement, Wells Fargo will also require an internal team to review customer inquiries, as well as create a website that describes the bank’s remediation efforts. “This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank,” according to Wells Fargo CEO Tim Sloan. That could be a slow stagecoach ride, Mr. Sloan.
Wells Fargo Already Out $1.6 Billion
Previously, Wells Fargo admitted its employees created unauthorized accounts in order to meet quote demands by managers. The company paid over $600 million in restitution to 3.5 million of its customers through settlements with the Comptroller of the Currency, Consumer Finance Protection Bureau and a class-action lawsuit. In addition, Wells Fargo has paid more than $1 billion in civil penalties to the federal government. And now the state attorneys general have lined up to collect their share for consumer protection violations.
State AGs Happy Their States Are Compensated Too
States are claiming that this is a major victory for them because attorneys general there want to be able to enforce state consumer protection laws against national banks. According to Iowa Attorney General Tom Miller, one of four state attorneys general who led the investigation leading to the agreement, said “this agreement is unique and one of the largest multistate settlements with a bank since the national mortgage settlement in 2012.”
Each of the 50 states and the District of Columbia will get a part of the settlement, ranging from $1.1 million for the District of Columbia to $148.7 million to California. Customers should not expect to see any of this $575 million. Most states plan on putting the funds to general use in their consumer protection funds.