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People owed a portion of $2 billion that Wells Fargo has agreed to pay customers affected by some of the bank̵[ads1]7;s banking practices, may soon receive those funds.
The nation’s fourth-largest bank reached a settlement with the Consumer Financial Protection Bureau, announced Tuesday, to resolve customer abuse related to auto loans, savings accounts and mortgages, affecting about 16 million accounts.
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Wells Fargo also agreed to pay a $1.7 billion civil penalty — the largest ever handed down by the CFPB.
“We have already communicated with many of the customers who may have been affected by the matters covered by the settlement, and those efforts are ongoing,” a Wells Fargo spokesperson told CNBC.
In other words, if you are among the affected customers, you may have already received your share of the $2 billion, or you will automatically hear from Wells Fargo. You don’t need to take any action, said the bank.
The CFPB said the bank’s customers were illegally assessed fees and interest on car and home loans, had their cars wrongfully repossessed and that car and home loan payments were misused. In addition, Wells Fargo charged consumers illegal surprise overdraft fees and applied other incorrect fees to checking and savings accounts, and improperly froze some accounts, the CFPB said.
$1.3 billion has already reached 11 million accounts
More than 11 million customer accounts have already received more than $1.3 billion related to auto loan issues. Another 5 million customers with deposit accounts are receiving $500 million in remediation, including $205 million related to overdraft fees, and thousands of customers with mortgages will receive a portion of at least $195 million, a CFPB spokesperson said.
The amount that each injured consumer will receive (or already has) depends on the details. For customers whose vehicle was wrongfully repossessed, the remedy includes $4,000, but could be higher. For deposit accounts that were erroneously frozen, the settlement requires $150 for each affected customer.
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“As we have said before, we and our regulators have identified a number of unacceptable practices that we have worked systematically to change and provide customer remediation where necessary,” Charlie Scharf, Wells Fargo CEO, said in the company’s news release about the settlement. .
“This far-reaching agreement is an important milestone in our efforts to transform the operating practices of Wells Fargo and put these issues behind us,” Scharf said.