CFPB Orders Large Fine
Fine Includes Redress For Consumers And Penalty
The Consumer Financial Protection Bureau (CFPB) was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) enacted in 2010. Under Dodd-Frank, the CFPB was charged with protecting consumers against abuses related to credit cards, mortgages, and other financial products. The CFPB has exclusive authority to enforce federal consumer laws against non-banking financial institutions and power to levy fines and seek redress for consumers. 12 U.S.C. § 5514. The CFPB also has exclusive federal consumer law supervisory authority and primary enforcement authority over banks with over $10 billion in assets. 12 U.S.C. § 5515.
CFPB Enforcement Action
The CFPB recently announced that it is ordering Wells Fargo Bank to pay more than $2 billion in redress to consumers and a $1.7 billion civil penalty for alleged legal violations across several of its largest product lines. The bank’s allegedly illegal conduct led to billions of dollars in financial harm to its customers and, for thousands of customers, the loss of their vehicles and homes, according to the CFPB. Under the terms of the order, Wells Fargo will pay redress to the over 16 million affected consumer accounts, and pay a $1.7 billion fine, which will go to the CFPB’s Civil Penalty Fund, where it will be used to provide relief to victims of consumer financial law violations.
The CFPB’s specific findings include that Wells Fargo:
- Unlawfully repossessed vehicles and bungled borrower accounts: Wells Fargo had systematic failures in its servicing of automobile loans that resulted in $1.3 billion in harm across more than 11 million accounts. The bank incorrectly applied borrowers’ payments, improperly charged fees and interest, and wrongfully repossessed borrowers’ vehicles. In addition, the bank failed to ensure that borrowers received a refund for certain fees on add-on products when a loan ended early.
- Improperly denied mortgage modifications: During at least a seven-year period, the bank improperly denied thousands of mortgage loan modifications, which in some cases led to Wells Fargo customers losing their homes to wrongful foreclosures. The bank was aware of the problem for years before it ultimately addressed the issue.
- Illegally charged surprise overdraft fees: For years, Wells Fargo unfairly charged surprise overdraft fees – fees charged even though consumers had enough money in their account to cover the transaction at the time the bank authorized it – on debit card transactions and ATM withdrawals. As early as 2015, the CFPB, as well as other federal regulators, including the Federal Reserve, began cautioning financial institutions against this practice, known as authorized positive fees.
- Unlawfully froze consumer accounts and mispresented fee waivers: The bank froze more than 1 million consumer accounts based on a faulty automated filter’s determination that there may have been a fraudulent deposit, even when it could have taken other actions that would have not harmed customers. Customers affected by these account freezes were unable to access any of their money in accounts at the bank for an average of at least two weeks. The bank also made deceptive claims as to the availability of waivers for a monthly service fee.
Consumers can file complaints directly with the CFPB. The CFPB maintains a consumer hotline at 1(855) 411-2372 and an online complaint process available at https://www.consumerfinance.gov/complaint/getting-started/.
Ingrid M. Evans and the other California and San Francisco consumer, securities, financial elder abuse and annuity and life insurance attorneys can be reached at Evans Law Firm, Inc. by calling (415) 441-8669, or by email at <a href=”mailto:email@example.com”>firstname.lastname@example.org</a>. Our toll-free number is 1-888-80EVANS (888-503-8267). Our attorneys have experience with complex financial contracts and large insurance companies. We can help guide your case through a jury trial or toward an equitable settlement. We also handle cases involving physical and financial elder abuse, qui tam and whistleblower law, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.