Wells Fargo to pay $142 Million for “customer remediation”
July 10, 2017
• Says it adds to options for customers
• Stems from improper retail sales practices
Wells Fargo & Company (NYSE: WFC) says it will pay out a total of $142 million for customer remediation and settlement expenses traced it its improper retail sales practices.
The settlement includes a process to compensate customers for increased borrowing costs due to credit-score impact associated with a potentially unauthorized account.
Compensation will be paid if a customer’s credit score dropped because of a potentially unauthorized account and the customer opened an authorized credit product with any lender within time periods specified in the agreement. The payments will take into account how much the credit score declined, the type and size of the subsequent authorized credit product, and other factors, the bank says.
The deal settles a class-action lawsuit concerning improper retail sales practices (Jabbari v. Wells Fargo & Co., et al.) following a July 8 order from the U.S. District Court for the Northern District of California granting preliminary approval. With the court’s preliminary approval of the settlement agreement, Wells Fargo and the plaintiffs are preparing to issue notices that will provide information about the process for making claims.
“This preliminary approval is a major milestone in our efforts to make things right for our customers,” says Tim Sloan, Wells Fargo’s President and Chief Executive Officer. “It further ensures each customer impacted by an improper retail sales practice has every opportunity for remediation. This is in addition to our direct efforts to review accounts and provide remediation.”
Wells Fargo says it expects this settlement to resolve substantially all claims in 10 other pending class actions that allege unauthorized accounts were opened in customers’ names or that customers were enrolled in products or services without their consent.
Within the next three months, broad outreach to current and former customers will begin, the bank says, and notices will be issued to potential class members that will provide information about the process for making claims, and customers who believe they should be included in this settlement will be able to submit claims. The settlement agreement is subject to final court approval, which will be required before payments are made to class members.
The settlement class will consist of all persons who claim that Wells Fargo opened, without their consent, a consumer or small business checking or savings account or an unsecured credit card or line of credit or enrolled them, under certain circumstances, in Identity Theft Protection services, in each case between May 1, 2002 and April 20, 2017. After attorneys’ fees and costs of administration, class members will be paid first for out-of-pocket losses, such as fees incurred due to unauthorized account openings. Amounts remaining after out-of-pocket losses will be split among all claimants, based on the number and kinds of unauthorized accounts or services claimed.