Officials announced Tuesday that banking giant Wells Fargo will pay $3.7 billion to settle widespread banking violations that affected millions of its customers, prompting the wrongful repossession of vehicles and wrongful foreclosures on homes.
The settlement includes $2 billion to compensate consumers and a $1.7 billion civil penalty, the Consumer Financial Protection Bureau said.
Among other violations, officials said Wells Fargo illegally assessed fees and interest charges on auto and mortgage loans, charged customers with unlawful surprise overdraft fees and applied incorrect charges to checking and savings accounts. The issues affected more than 16 million accounts, according to CFPB.
In a statement issued Monday, CFPB Director Rohit Chopra described Wells Fargo as a “repeat offender” of consumer abuses. The company has faced several sanctions due to violations of consumer protections for the last six years, since bank employees were found to have opened millions of fake bank accounts to reach sales goals, according to the Wall Street Journal and The Associated Press.
Wells Fargo CEO Charlie Scharf called Tuesday’s settlement “an important milestone in our work to transform the operating practices at Wells Fargo and put these issues behind us.”
The bank continues to operate under a Federal Reserve order enacted in 2018 that blocks it from growing until after authorities determine that issues with the company’s corporate culture are resolved, the AP reported.
“We have made significant progress over the last three years and are a different company today,” Scharf said on Tuesday. “We remain committed to doing the right thing for our customers and working closely with our regulators and others to deal appropriately with any issue that arises.”