Wells Fargo to Pay $3.7 Billion Over Consumer Abuses
Wells Fargo agreed to pay $3.7 billion to the Consumer Financial Protection Bureau (CFPB) concerning abuses tied to bank accounts, mortgages, and auto loans. Wells Fargo was systematically and illegally adding fees and interest to more than 16 million accounts. The bank misapplied payments resulting in fees. Thousands of people unjustly had their vehicles repossessed and homes foreclosed as a result of the illegal fees. $1.7 Billion was a civil penalty, and the other $2 billion was to redress consumers. Read the CFPB press release here.
Wells Fargo is the third largest bank in the U.S. and the 16th largest bank in the world. Wells Fargo has a long history of abuses. CFPB Director Rohit Chopra said, "Wells Fargo's rinse-repeat cycle of violating the law has harmed millions of American families."
Here We Go Again
In a prepared statement, Chopra detailed some of Wells Fargo's abuses.
· In 2015, CFPB ordered Wells Fargo to pay $24 million in penalties for its role in an illegal mortgage kickback scheme.
· In 2016, it paid $4 million to the CFPB for scamming student loan borrowers. A few months later, the CFPB fined Wells Fargo $100 million for its fake account fraud.
· In 2018, the CFPB assessed a $1 billion fine for illegal fees and insurance practices in its auto lending and mortgage lending business.
Wells Fargo's current violations happened over several years across the company's most prominent product lines. The CFPB detailed four areas of gross abuse: unlawfully repossessed vehicles, improperly denied mortgage modifications, illegal fees, and unlawfully freezing customer accounts.
· Unlawfully repossessed vehicles and bungled borrower accounts: The bank systematically misapplied payments on more than 11 million automobile loans resulting in $1.3 billion in harm. The bank was misapplying payments and then adding fees leading to wrongfully repossessing vehicles. The bank did not refund the wrongful fees.
· Improperly denied mortgage modifications: Over at least seven years, the bank improperly denied thousands of legitimate mortgage modifications leading to an undisclosed number of foreclosures. The bank was aware of the issue for years before modifying its processes.
· Illegally charged surprise overdraft fees: For years, Wells Fargo charged overdraft fees on accounts with ample funding to cover the transaction.
· Unlawfully froze customer accounts and misrepresented fee waivers: The bank erroneously froze over 1 million accounts. Customers affected by the freeze could not access their money or accounts for at least two weeks.
What Does It Mean?
There is an adage. "Once is an accident. Twice is a coincidence. Three times is a pattern." Wells Fargo has a history of fraudulent and criminal practices. In the last seven years, Wells Fargo has been guilty of criminal behavior five times. For whatever reason, people continue to trust them with their money.
Wells Fargo does not own a criminal behavior monopoly. It is widespread throughout banking. Wells Fargo may be the worst offender, or they may be the worst at concealing their deceptive practices. For example, JP Morgan Chase, the largest U.S. bank, was fined $920 million after they manipulated the silver price thousands of times. Bank of America, the second largest bank, illegally garnished portions of 3,700 customer's paychecks without a court order.
Henry Ford said, "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." The truth is that banks can be convenient but pose an absolute and constant intermediary risk. Whether criminal behavior, high-risk speculation or something else, banks will find ways to separate you from your money. The best defense against bank risks is only keeping what you need to pay the bills in a bank. Precious metals are a great way to store wealth outside banks in a highly liquid state.
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