$185M Settlement Reached With Wells Fargo Over Unauthorized Accounts

LOS ANGELES (CBSLA.com) — Wells Fargo will pay  a total of $185 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, prosecutors said Thursday.

In addition to the$50 million settlement reached with Los Angeles City Attorney Mike Feuer’s office, the bank also reached settlements with two federal agencies in which it agreed to pay at least an additional $135 million in penalties over similar claims, Feuer’s office said.

The U.S. Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) will also require the bank to enact “broad changes to its sales practices and internal oversight”, according to Feuer.

The $100 million penalty paid to the CFPB is the largest penalty the federal agency has ever imposed, CFPB Director Richard Cordray said.

City prosecutors filed a civil complaint last May alleging employees of Wells Fargo opened unauthorized accounts for customers and then charged them bogus fees, which they say in turn damaged their credit.

In all, bank employees may have opened more than 1.5 million unauthorized deposit accounts and more than 565,000 applications for credit card accounts that may not have been authorized by using consumer information without their knowledge or consent, according to Feuer.

About 5,300 Wells Fargo employees have been terminated following the allegations.

In a statement, the bank said: “Our entire culture is centered around doing what’s 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.”

CBS2’s Craig Herrera spoke to Wells Fargo customers Thursday about the settlement.

“Sometimes I don’t always open my bank statements immediately.” said Ken Wallman.

As paperwork began to pile up, he saw he was signed up for accounts he never asked for and was paying fees for things he never wanted.

“I had just gone in for one account,” he said.

Herrera said even though Wallman went into the bank and tried to cancel some of the accounts, he kept getting a sales pitch on why he should keep them.

“At the time I was there, they still sold me on something else,” he says, “which is wanting me to have my businesses have their credit card machines.”

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