Wells Fargo May be Fined $1B for Questionable Consumer Charges

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Wells Fargo may be fined $1 billion in civil fines for allegedly hitting consumers with improper fees on mortgage and auto loans.

The financial giant recently admitted that it may have improperly charged home loan customers to extend “locks” on rates for mortgage and auto loans.

Additionally, the bank admits that its auto loan consumers may have been charged for unnecessary insurance.

As a result, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency may charge the company civil penalties, which would cause Wells Fargo to have to alter reported financial results for the quarter that ended on March 31.

However, the impact of such a fine on the bank’s finances remains undetermined. A representative from Wells Fargo stated that “at this time, we are unable to predict final resolution of the CFPB/OCC matter and cannot reasonably estimate our related loss contingency.”

Wells Fargo stated that the potential $1 billion fine would be paid in addition to the refunds the bank has promised to affected consumers improperly hit with fees between Sept. 16, 2013, and Feb. 28, 2017. The bank stated that the refunds paid to consumers would likely be significantly lower than the improper fees charged to consumers for mortgage rate lock extensions. The bank reports that an estimated 110,000 consumers were charged improper “lock rate extension fees.”

In a separate class action lawsuit alleging improper conduct, 570,000 car loan borrowers were charged for car insurance without their consent. Wells Fargo earlier stated that this practice was implemented in cases in which “there was no evidence” that a customer had car insurance — in this instance, the bank bought car insurance for the client and charged them for it.

The insurance alleged to serve as protection for cars was called “collateral protection insurance.” Wells Fargo stated that it will pay an estimated $80 million in refunds to customers for whom they improperly purchased car insurance.

Consumers have filed lawsuits against Wells Fargo for both their improper mortgage rate fees, and the auto insurance coverage issue. These accusations come on the heels of a number of scandals uncovered in recent years. In 2016, Wells Fargo was charged a $185 million fine after it was discovered that employees around the country were opening accounts for consumers without their knowledge to hit sales goals.

Consumers claimed that among employees, there was a widespread practice of the company transferring funds from a client’s existing account into the new accounts, then hitting the client with overdraft fees when too much money was withdrawn from the old account. In addition to the extensive fine Wells Fargo was charged, they agreed to pay $142 million to allegedly affected consumers in a class action lawsuit settlement.

Speaking to the company’s recent track record of scandals and alleged misconduct, CEO Tim Sloan stated that “I’m confident that our outstanding team will continue to transform Wells Fargo to a better, stronger company; however, we recognize that it will take time to put all of our challenges behind us.” However, Sloan reported that he was unable to promise that no new scandals would emerge, despite an effort to re-asses the company’s practices.