Los Angeles City Attorney Mike Feuer today announced that his office has reached a settlement with Wells Fargo, the nation’s third largest bank, of litigation alleging the bank had opened accounts without customers’ consent, failed to apprise customers these accounts had been opened, and caused customers to incur unwanted fees and other negative financial consequences. As a result of the settlement, Wells Fargo is required to provide restitution to affected customers and pay $50 million in civil penalties, the largest such payment in the history of the City Attorney’s office. The penalties will be devoted to future consumer protection.
Feuer’s announcement was accompanied by simultaneous announcements from key federal agencies that they, too, had resolved claims against Wells Fargo arising from the same issues. The Consumer Financial Protection Bureau (CFPB) announced it had issued a sweeping Consent Order to the bank; the Office of the Comptroller of the Currency (OCC) announced it had issued a Consent Order of its own. Both federal agencies require the bank to make broad changes to its sales practices and internal oversight. Both agencies also require Wells Fargo to pay penalties: $100 million to the CFPB, $35 million to the OCC.
“This is a major victory for consumers,” said Feuer. “Consumers must be able to trust their banks. They should never be taken advantage of by their banks. We’re holding Wells Fargo accountable and assuring the violations we’ve alleged never happen in the future. This extraordinary resolution sends a strong message—to big banks and consumers alike—that we’ll be vigilant in protecting consumer rights.”
In May, 2015, following an extensive investigation precipitated by a report in the Los Angeles Times, Feuer’s office sued Wells Fargo over the allegations of unauthorized accounts. After filing the lawsuit, the City Attorney received more than 1,000 phone calls and emails from customers and current and former Wells Fargo employees across the nation about the issues raised in the litigation.
The settlement between the City Attorney and the bank establishes a complaint and mediation system for California consumers harmed by the bank’s alleged practices, and requires Wells Fargo to continue a restitution program for affected customers. Wells Fargo must also alert all of its California customers who have consumer or small business checking or savings accounts, credit cards or unsecured lines of credit, that they should consider visiting their local bank or call Wells Fargo to review their accounts, close accounts or discontinue services they do not recognize or want, and resolve remaining problems. The settlement requires that every six months for the next two years, Wells Fargo must provide to the City Attorney audit reports assessing the bank’s compliance with the agreement, verified under penalty of perjury by an officer or director of the bank.