Information and Alerts

Government Actions 1

CFPB opening unauthorized accts

On September 8, 2016 the Consumer Financial Protection Bureau (CFPB) entered into a Consent Order with Wells Fargo Bank, N.A. (Wells Fargo). Administrative Proceeding: 2016-CFPB-0015.

The CFPB has fined Wells Fargo $100 million dollars for illegally enrolling consumers in unauthorized deposit and credit card accounts without their knowledge or consent in order for Wells Fargo employees to obtain financial compensation for meeting sales targets. The Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits unfair, deceptive, and abusive acts and practices. Wells Fargo’s violations include:

• Opening deposit accounts and transferring funds without authorization. According to the bank’s own analysis, employees opened roughly 1.5 million deposit accounts that may not have been authorized by consumers.
• Applying for credit card accounts without authorization. According to the bank’s own analysis, Wells Fargo employees applied for roughly 565,000 credit card accounts that may not have been authorized by consumers.
• Issuing and activating debit cards without authorization.
• Creating phony email addresses to enroll consumers in online banking services.

The CFPB's order requires Wells Fargo to:

• Pay full refunds to consumers. Wells Fargo must refund all affected consumers the sum of all monthly fees, nonsufficient fund fees, overdraft charges, and other fees they paid because of the creation of the unauthorized accounts.
• Ensure proper sales practices Wells Fargo must hire an independent consultant to conduct a thorough review of its procedures.
• Pay a $100 million dollar fine.

Wells Fargo has consented to the issuance of the Consent Order by the CFPB under section 1053 and 1055 of the CFPA, 12 U.S.C 5563, 5565, without admitting or denying the findings of facts and conclusions of law, except that Wells Fargo admits the facts necessary to establish the CFPB’s jurisdiction over them and the subject matter of this action.

Simultaneous with this Consent Order, The Los Angeles City Attorney and the Office of the Comptroller of Currency (OCC) announced they had reached a settlement with Wells Fargo arising from the same issues.

For more information on this action, or actions taken by The Los Angeles City Attorney’s Office and the OCC please visit: www.lacityattorney.org, www.occ.treas.gov and The Consumer Financial Protection Bureau at www.consumerfinance.gov.

Government Actions 2

CFPB Private Student Loans

On August 22, 2016 The Consumer Financial Protection Bureau (CFPB) and Wells Fargo consented to the issuance of a Consent Order for illegal private student loan servicing practices that increased costs and unfairly penalized certain student loan borrowers, File No. 2016-CFPB-0013. Without admitting or denying any of the findings of fact or conclusions of law, except that Respondent admits the facts necessary to establish the CFPB’s jurisdiction over Wells Fargo and the subject matter of this action.

The CFPB identified breakdowns throughout Wells Fargo’s servicing process including failing to provide important payment information to consumers, charging consumers illegal fees and failing to update inaccurate credit reporting information.

According to the CFPB’s order, Wells Fargo failed to provide the level of student loan servicing that borrowers are entitled to under the law. Because of the breakdowns throughout Wells Fargo’s servicing process, thousands of student loan borrowers encountered problems with their loans or received misinformation about their payment options. The CFPB found that the company violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibitions against unfair and deceptive acts and practices, as well as the Fair Credit Reporting Act. Specifically, the CFPB found that the company:

Impaired consumers’ ability to minimize costs and fees.

Misrepresented the value of making partial payments.

Charged illegal late fees.

Failed to update and correct inaccurate information reported to credit reporting companies.

The Consent Order requires Wells Fargo to improve its consumer billing and student loan payment processing practices. The company must also provide $410,000.00 in relief to borrowers and pay a $3.6 million civil penalty to the CFPB.