Home Alts News Wells Fargo Reaches $575 Million Agreement with States over Sales Misconduct

Wells Fargo Reaches $575 Million Agreement with States over Sales Misconduct

Wells Fargo & Co. (NYSE: WFC) has agreed to pay $575 million to settle widespread claims over the bank’s improper sales practices.

Wells Fargo & Co. (NYSE: WFC) has agreed to pay $575 million to settle widespread claims over the bank’s improper sales practices. The firm reached an agreement with all 50 state attorneys general and the District of Columbia regarding previously disclosed retail sales practices, auto collateral protection insurance and guaranteed asset/auto protection, and mortgage interest rate lock matters.

Wells Fargo previously acknowledged opening millions of deposit, credit card, and other accounts, and conducting transfers of funds without customer authorization over various periods from 2002 through 2017.

During that time, “Wells Fargo opened unauthorized accounts and enrolled customers in bank products to meet aggressive sales goals, as result of extreme management pressure, threat of job loss for branch employees, and an abusive company culture,” the California Department of Justice said in a statement.

The bank opened more than 3.5 million unauthorized accounts and enrolled 528,000 customers in online bill pay based on improper sales practices, and also enrolled some consumers in renter and life-insurance policies that the consumer never authorized. From 2005 to 2016, Wells Fargo added collateral protection insurance or delayed cancellation of such insurance on millions of auto loans.

“Wells Fargo customers entrusted their bank with their livelihood, their dreams, and their savings for the future,” said California Attorney General Xavier Becerra, who recovered $148.7 million for California customers. “Instead of safeguarding its customers, Wells Fargo exploited them, signing them up for products – from bank accounts to insurance – that they never wanted.”

He added, “This is an incredible breach of trust that threatens not only the customers who depended on Wells Fargo, but confidence in our banking system. As our investigation found, Wells Fargo’s conduct was unlawful and disgraceful.”

Wells Fargo has been engaged with its federal regulators to address these issues and is remediating affected customers.

“This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank,” said Tim Sloan, chief executive officer and president of Wells Fargo.

As of the end of third quarter 2018 the company had accrued $400 million of the settlement amount and expects to accrue the remaining $175 million in fourth quarter 2018.

Wells Fargo is a financial services company with $1.9 trillion in assets. Founded in 1852 and headquartered in San Francisco, the firm provides banking, investment and mortgage products and services, as well as consumer and commercial finance.

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