Many consumers have complained for years that Wells Fargo has closed down accounts of fraud victims. Federal authorities have even investigated the allegations, but the bank has consistently denied them – until now. This scandal has been exposed in a lawsuit filed by former Wells Fargo customer Carlos Valles. In this article, we’ll discuss the lawsuit and how Wells Fargo is being held accountable for this scandal. The following are some of the major points raised by this lawsuit.
Wells Fargo sued for opening unauthorized credit and debit card accounts in the name of its banking customers
According to the lawsuit, Wells Fargo knowingly opened unauthorized credit and debit card accounts in the names of its banking customers. It also made up sales activities to gain a competitive edge. To do so, it pressured employees to sell new products to existing customers. Employees began calling this practice “gaming.” The bank opened unauthorized accounts, issued credit and debit cards to non-existent individuals, and moved money from legitimate accounts to fraudulent ones.
In addition to opening unauthorized accounts, Wells also opened fake accounts, enrolment of consumers in unauthorized products and lied about the status of those accounts. In one instance, Wells fargo opened 20,000 accounts under the names of its own banking customers. It’s not surprising that many people felt cheated and sued the bank. The settlement reached by Wells Fargo is expected to settle civil and criminal liability.
In another incident, employees of Wells Fargo secretly opened and funded unauthorized accounts without customers’ permission. To do so, Wells Fargo employees set up fake email accounts and sham accounts in the names of its banking customers. Ultimately, these customers found out about the unauthorized accounts only after they started accruing fees. In the end, Wells Fargo agreed to pay more than $185 million to settle the cases and settle criminal charges. In addition to paying damages to the victims, the bank will pay a $100 million penalty to the CFPB Civil Penalty Fund.
Fined $2.7 billion
In the wake of the scandal, Wells Fargo has been fined a total of $2.7 billion. The company also agreed to pay nearly $1 billion in fines to regulators, including the Consumer Financial Protection Bureau. Despite the fines, the company managed to make almost $20 billion in profits last year. However, the scandal caused the company to temporarily halt its growth. Regulators initially restricted growth, but later lifted these restrictions after it proved that it had made changes.
The scandal began when bank customers noticed they had been charged for accounts they hadn’t requested. An avalanche of complaints led to criminal and civil lawsuits against Wells Fargo. Ultimately, the company paid more than $2.7 billion to settle account fraud lawsuits. The scandal caused Wells Fargo to fire John Stumpf, who had been CEO at the time. The bank also settled other lawsuits.
In settling the case, Wells Fargo entered into a deferred prosecution agreement in which it agreed not to commit any criminal activities for three years. This means it will not face prosecution for the crimes committed by employees. The bank has agreed to cooperate with future investigations, which is a key part of the agreement. In addition to paying fines, the bank entered into a settlement agreement with the SEC and has agreed to pay a $3 billion fine.
Set up $500 million fund to compensate investors
As part of a recent settlement agreement, California-based Wells Fargo agreed to pay $480 million to settle a securities fraud lawsuit. The lawsuit accused the company of misrepresenting its sales practices and misleading investors. As a result, millions of fake accounts were opened by Wells Fargo employees to meet sales goals. As a result, the company agreed to pay out billions of dollars in fines and lost the trust of investors. The company also restructured its board and forced two CEOs to resign. The scandal has still not healed the bank’s reputation. The Wells Fargo settlement will return at least $500 million of this money to investors.
The settlement agreement between Wells Fargo and the SEC includes an agreement that Wells will voluntarily cease any future violations of the Securities Exchange Act and will pay a $500 million civil money penalty to investors. The settlement agreement also stipulates that Wells Fargo will establish a $500 million fund to compensate investors who were harmed by Wells Fargo’s account fraud practices. This settlement will help investors with their legal expenses.
The bank has apologised for its mistakes in the recent scandal. A special group was created to rehire employees who quit in protest of the fraud. As a result, the bank has repaid at least a billion dollars to the victims of the scandal. The company’s CEO, Chuck Stumpf, has acknowledged his personal responsibility for the scandal. The bank’s apologetic ads are a testament to this.
