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Wells Fargo agrees to $575 million settlement affecting all 50 states in wake of fake accounts

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Wells Fargo agrees to $575 million settlement affecting all 50 states in wake of fake accounts


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This time for its 401k practices.
Time

Wells Fargo Bank will pay $575 million to resolve claims that the bank violated state consumer protection laws as part of a major settlement agreement covering consumers in all 50 states and the District of Columbia, Iowa Attorney General Tom Miller announced Friday.

Iowa’s share of the settlement is $6,180,941.33, which will go to the state’s Consumer Education and Litigation Fund, the attorney general’s office said in a release.

Wells Fargo will also create a consumer restitution review program, according to the attorney general’s office. Consumers who haven’t been fully reimbursed through restitution programs already in place may seek review by a bank escalation team, the release says.

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Wells Fargo has been under fire since it was revealed in 2016 that employees had fraudulently opened millions of fake accounts to meet sales goals.

According to the attorney general’s office, the settlement addresses allegations that Wells Fargo:

  • Opened millions of unauthorized accounts and enrolled customers into online banking services without their knowledge or consent;
  • Improperly referred customers for enrollment in third-party renters and life insurance policies;
  • Improperly charged auto loan customers for force-placed and unnecessary collateral protection insurance;
  • Failed to ensure that customers received refunds of unearned premiums on some optional auto finance products;
  • Incorrectly charged customers for mortgage rate lock extension fees.

“This agreement is unique and one of the largest multistate settlements with a bank since the National Mortgage Settlement in 2012,” Miller said. “This significant dollar amount, on top of actions by federal regulators, holds Wells Fargo accountable for its practices.”

In February, the Federal Reserve bank handed down what one analyst called a “shocking penalty” by prohibiting Wells Fargo from growing total assets beyond their levels at the end of 2017 until the bank showed the Fed it had made reforms. 

Wells Fargo recently announced it will lay off 400 Des Moines-area workers as the beleaguered bank works to shed tens of thousands of jobs across the country.

Experts say the cutbacks can be laid at the feet of Wells Fargo’s mistakes.

With about 14,000 workers, Wells Fargo is the single largest private employer in the Des Moines metro area. Iowa’s capital city is home to the bank’s home-mortgage division and the company’s third-largest concentration of workers, behind only Charlotte and Minneapolis-St. Paul.

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