Wells Fargo Faces $3B Fine Over Fake Accounts

Wells Fargo has been hit with a $3 billion fine from federal authorities in relation to the banking giant’s fake accounts scandal.

The fine was reached as part of a settlement with the Justice Department and the Securities and Exchange Commission.

The $3 billion deal, which was years in the making, resolves federal claims that Wells Fargo participated in a massive fake accounts scheme.

While pursuing action against the bank, federal persecutors criticized Wells Fargo for the “staggering size, scope and duration” of their unlawful scheme.

According to CNN, the new CEO of Wells Fargo supports the settlement and criticized the past unlawful conduct. CEO Charlie Scharf, who only joined Wells Fargo in September, said “the conduct at the core of today’s settlements — and the past culture that gave rise to it — are reprehensible and wholly inconsistent with the values on which Wells Fargo was built. Our customers, shareholders and employees deserved more from the leadership of this company.”

Unlike civil settlements, where oftentimes the defendant does not indicate any wrongdoing, Wells Fargo admitted to the scheme as part of the deal. The bank admitted that it created unauthorized bank accounts for consumers between 2002 and 2016. Wells Fargo has also acknowledged the consequences of its actions, including false bank records, consumer credit damage, misuse of personal information, and the collection of millions in fraudulent fees and interest.

“Today’s announcement should serve as a stark reminder that no institution is too big, too powerful, or too well-known to be held accountable and face enforcement action for its wrongdoings,” U.S. Attorney Andrew Murray for the Western District of North Carolina said, according to Forbes.

Although the federal claims against Wells Fargo have been resolved, the deal does not resolve the potential for federal prosecution against guilty bank employees who wrongfully opened the accounts. The deal similarly does not resolve any class action lawsuits filed against Wells Fargo from consumers in civil court.

In 2018, one class action settlement did resolve some claims against Wells Fargo in relation to its fake accounts scandal. In the settlement, Wells Fargo agreed to pay $142 million to consumers who had an unauthorized account opened in their name between May 1, 2002 and April 20, 2017.

A variety of benefits were available under the class action settlement, including fee reimbursement and credit impact damages. The fee reimbursements varied from a full refund to a flat payment to consumers, depending on when the relevant accounts were opened.

Credit impact damages were to be awarded on a case by case basis, but could compensate consumers for higher interest rates due to credit consequences of a fake Wells Fargo account.

The class action lawsuit settlement was approved by a California federal judge in May 2018, although payments have not yet been made from the settlement. There are reportedly several appeals pending against the settlement. Class Members will not receive compensation until all of the appeals are exhausted.

Did you have a fake bank account opened in your name by Wells Fargo? Share your experiences in the comments section below.

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