Wells Fargo will pay $50 million in penalties to the city of Los Angeles and restitution to customers as part of a settlement resolving litigation alleging the company opened up bank accounts without customers’ permission, the City Attorney’s Office announced today.
The settlement with Wells Fargo is on top of at least $135 million in penalties that the bank has also agreed to pay to two federal agencies over similar allegations.
The settlement stems from a lawsuit City Attorney Mike Feuer filed against Wells Fargo last May after the Los Angeles Times reported on the alleged fake accounts that were created without customers’ knowledge and led to customers racking up bank fees.
The City Attorney’s Office also has required that Wells Fargo set up a system for customers to claim restitution, under the settlement. The $50 million civil penalties under the city settlement will go toward “future consumer protection,” according to Feuer’s office.
Feuer called the settlement “a major victory for consumers.”
“We’re holding Wells Fargo accountable and assuring the violations we’ve alleged never happen in the future,” he said. “This extraordinary resolution sends a strong message — to big banks and consumers alike — that we’ll be vigilant in protecting consumer rights.”
Wells Fargo said the agreements were made with its customers in mind and out of a desire to show accountability.
“Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us,” the company said in a prepared statement. “Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.
“Our entire culture is centered on doing what is right for our customers. However, at Wells Fargo, when we make mistakes, we are open about it, we take responsibility and we take action. Today’s agreements are consistent with these beliefs.”
The Consumer Financial Protection Bureau, one of the federal agencies that also reached a settlement with Wells Fargo, has alleged the bank opened hundreds of thousands of deposit and tens of thousands of credit card accounts without their customers’ knowledge or permission.
The fake accounts were set up by bank employees to achieve sales goals and reap financial incentive rewards, and the bank fired about 5,300 employees as the result of the allegations, according to the CFPB.
The CFPB’s settlement requires Wells Fargo to pay $100 million in penalties, while the other federal agency, the Office of the Comptroller of the Currency, has secured a settlement requiring the bank to pay $35 million in penalties.
