Financial Protection

CFPB orders Wells Fargo to pay $3.7 billion for wrongful foreclosures, car repossessions, overdraft fees and more

Largest enforcement action in CFPB history includes a record $1.7 billion penalty

CFPB | Public Domain

Today the Consumer Financial Protection Bureau (CFPB) ordered Wells Fargo, one of the nation’s largest banks, to compensate consumers more than $2 billion and pay a $1.7 billion fine for a breathtaking range of illegal practices affecting 16 million consumer accounts. 

The order is the CFPB’s largest enforcement action in its 11 year history. The fine will go to the CFPB’s Civil Penalty Fund. The $1.7 billion figure is more than the total amount of penalties that have been deposited to the fund to date. (The total amount was $1.5 billion through September 30, 2021.) 

The violations found by the CFPB include: 

  • $1.3 billion in harm to auto loan customers: Failures include incorrect application of payments and wrongful repossession of vehicles.
  • Improper denial of thousands of loan modifications for at least seven years: Some customers lost their homes as a result of the problem. Wells Fargo knew about it for years before doing anything.
  • Illegal charging of surprise overdraft fees: Customers were charged even when they had enough money in their accounts to cover charges when they were authorized. 
  • Unlawful freezing of more than 1 million customer accounts: A faulty filter incorrectly determined fraudulent activity and kept customers out of their accounts, on average, for two weeks.

Notably, the CFPB’s announcement about the order credited consumer complaints for helping with its investigation:

“The CFPB wishes to thank members of the public who submitted complaints through the CFPB’s complaint system across Wells Fargo product lines. These complaints aided in the detection of some of the illegal activity uncovered in the CFPB’s investigation.”

Today’s action is another example of the CFPB’s crackdown on repeat offendersAs Director Chopra said:

“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families…This is an important initial step for accountability and long-term reform of this repeat offender.”

The CFPB has taken four prior actions against the company for crossing legal fault lines, including auto-loan and mortgage violations and creation of more than two million unauthorized accounts

The CFPB is once again showing its worth to consumers, when it has committed leadership and independence from industry influence. 

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