It seems like every time you turn around, another negative story about
banking giant Wells Fargo comes to light. As of late 2013, Wells Fargo
was ranked as the fourth-largest bank, behind JP Morgan Chase, Bank of
America and Citigroup, with nearly 1.8 trillion in assets. That same report
claimed that Wells Fargo saw the biggest increase in assets among the
top four banks from 2012 to 2013. This growth was attributed to overseas
loan purchases, as well as picking up cheap European loan portfolios from
struggling institutions. Now it appears that the continued growth of megabank
Wells Fargo may have some shadier aspects as well.
Wells Fargo Will Pay $185 Million to Settle Latest Scandal
With one scandal after another dogging Wells Fargo, the San Francisco-based
bank recently agreed to pay $185 million to settle a federal complaint
accusing Wells Fargo of creating more than two million fraudulent customer
accounts. Heads rolled when this latest scandal came to light, with more
than 5,000 Wells Fargo employees fired over the past two years. Additionally,
the bank claims it will put new policies into place which will stop this
type of incident from occurring in the future.
“Incentive-Driven” Culture Leads to Fraudulent Employee Practices
It is believed the “incentive-driven” culture of Wells Fargo
Bank was the motivating factor in the fraudulent customer account scandal.
Reputation Management Consultant Eric Schiffer recently said in an interview
that when profits overtake questionable activities, serious problems can
occur and that “When you turn a blind eye, then you are endorsing
Wells Fargo Facing One Legal Battle After Another
Wells Fargo has faced a long string of legal battles over the past several
years, including those which claimed the bank engaged in predatory lending
practices, imposed illegal fees on their customers, and discriminated
in their hiring practices. Just a month ago, Wells Fargo agreed to pay
$4 million in fines for allegedly charging illegal fees to students who
borrowed money to attend college from the bank. It appears Wells Fargo
applied loan payments in a way which caused student loan borrowers to
face multiple late fees. According to a Wells Fargo those specific practices
were modified “years ago.”
False Home Loan Claims Results in the Largest FHA Settlement in History
The U.S. Department of Justice filed suit against Wells Fargo, resulting
in a $1.2 billion settlement—the largest in FHA history—for
falsely claiming its home loans qualified to be insured by the Federal
Housing Administration. In that same lawsuit, Wells Fargo was shown to
have avoiding fixing literally thousands of improperly written loans.
When the borrowers defaulted, the FHA was left holding the bag. By extension,
American taxpayers ended up paying for Wells Fargo’s bad loans.
“Ghetto Loans” Cause Hundreds of Families to Lose Homes
Another federal lawsuit facing Wells Fargo revolves around claims by the
City of Baltimore that the bank specifically targeted African-Americans
with high-interest, predatory loans. Specifically, Wells Fargo targeted
black churches, believing the leaders of the churches could and would
influence those attending the church to take out subprime lines. Called
“ghetto loans” by employees of Wells Fargo, these loans caused
hundreds of families to lose their homes to foreclosure, and cost the
city of Baltimore millions.
How Much of the Latest $185 Million in Fines Will Consumers Receive?
When this most recent scandal came to light, Wells Fargo officials admitted
their mistakes, claiming they would engage in better employee training
to avoid future issues like this one. Wells Fargo employees issued credit
cards with no customer consent and created fake e-mails in order to sign
customers up for online banking services. Most of the customers learned
about those unwanted services only after they began accumulating unexpected
fees, or received credit or debit cards in the mail which were not requested.
For the most part, the sham accounts were closed shortly after being opened.
Of the $185 million Wells Fargo will pay, $100 million of that is a penalty
from CFPB, and only about $2.6 million will be refunded to customers for
inappropriately charged fees. Some $35 million will go to the Office of
the Comptroller of the Currency, while the City and County of Los Angeles
will receive from $48-$50 million.
Consumer Protection Lawyers
If you or someone you love has been a victim of unfair or deceptive bank
practices, contact the
national consumer protection lawyers at Golomb & Honik, P.C. today at
(215) 278-4449, or fill out our confidential
Contact Form. We have successfully fought credit card companies, banks, and financial
institutions and protected consumer rights for decades. Call us today
to review your case.
The national consumer protection lawyers at Golomb & Honik, P.C. have
successfully represented individuals in Philadelphia, Pennsylvania, New
Jersey, and throughout the United States.