Delaware customers will get about $2 million from Wells Fargo in a 50-state settlement over allegations of unneeded insurance for auto loans and accounts being opened without customer authorization.
The agreement also calls for measures to ensure that customers who believed they were wronged by the company to seek redress.
Wells Fargo is one of Delaware’s largest banks and is a bigger player in the Philadelphia-area market.
Under previous settlements, the company is barred from growing its assets through expansion or mergers, a rare penalty for banking giants.
Wells has realigned management of its branch banking system and has made outreach efforts to businesses and consumers in the region and throughout its national footprint.
Delaware funds will go into the state’s Consumer Protection Fund.
Pennsylvania Attorney General Josh Shapiro announced in late December that Wells Fargo Bank N.A., will pay $575 million to resolve claims that the bank violated state consumer protection laws.
Allegations included:
- Opening millions of unauthorized accounts and enrolling customers into online banking services without their knowledge or consent.
- Referring customers for enrollment in third-party renters and life insurance policies.
- Charging more than 850,000 auto finance customers for unnecessary and duplicative insurance policies.
- Tailing to ensure that customers received refunds of unearned premiums on certain optional auto finance products, and (5) incorrectly charging customers for mortgage rate lock extension fees.
Pennsylvania’s Bureau of Consumer Protection led the investigation and negotiation of the settlement.
Additionally, the company will pay a sum of money to consumers who were harmed.
The settlement was another chapter in a long-running scandal that the financial services company. It led to the ouster of the CEO and other top managers, who were cited for pushing for aggressive sales goals that led staff to open accounts without the consent of customers, who often saw charges that proved difficult to resolve.
Much of the activity took place in Wells Fargo’s West Coast stronghold of California and Arizona.
Shapiro noted that Wells Fargo has previously entered into consent orders with federal agencies – including the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB) – related to its alleged conduct.
Wells Fargo is providing restitution to consumers in excess of $600 million through its agreements with the OCC and CFPB as well as through settlement of a related consumer class-action lawsuit and has paid over $1.2 billion in civil penalties to the federal government and to the City and County of Los Angeles.
The bank also recently agreed to a $480 million settlement of a related securities class action. Additionally, under an order from the Federal Reserve, the bank is required to strengthen its corporate governance and controls and is currently restricted from exceeding its total asset size.
As part of the most recent settlement with the states, Wells Fargo has agreed to implement within 60 days a program through which consumers who believe they were affected by the bank’s conduct but fell outside the prior restitution programs, can contact Wells Fargo to be reviewed for potential redress.
Wells Fargo will create and maintain a website for consumers to use to access the program and will provide periodic reports to the states about ongoing restitution efforts.
