Wells Fargo to pay $110M to settle fake-accounts lawsuit

  • March 31 2017, 6:30am EDT

Wells Fargo has agreed to pay $110 million to settle a class action related to its phony-accounts scandal.

The settlement will cover about 2 million unauthorized accounts and will be used for customer remediation, the San Francisco company said in a news release Tuesday. The agreement requires court approval; the settlement pertains to a federal lawsuit filed in May 2015 in the U.S. District Court for the Northern District of California.

Members of the class will receive refunds of fees they paid tied to unauthorized account openings and other out-of-pocket losses. The agreement covers unauthorized account openings that took place between January 2009 and the settlement date.

Tim Sloan
Tim Sloan

“We want to ensure that each customer impacted by our sales-practices issue has every opportunity for remediation,” CEO Tim Sloan said in the release.

Wells Fargo said it had fully accrued for the amount of the settlement at Dec. 31. The bank on March 1 said that it could exceed its estimates for litigation losses by as much as $1.8 billion.

Wells Fargo has already been fined a total of $187.5 million by the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the Los Angeles City Attorney in connection with the scandal.

Also on Tuesday, the OCC downgraded Wells Fargo’s Community Reinvestment Act rating, citing a pattern of violations.

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Andy Peters

Andy Peters

Andy Peters writes about regional banks, consumer finance and debt collections for American Banker.