Wells Fargo to pay states $575M for phony accounts, deception scandals

By MarketsFOXBusiness

Wells Fargo plans to decrease headcount by up to 10%

Wells Fargo plans to reduce its workforce by up to 10% over the next three years in order to meet customer needs and improve operations. FBN’s Liz Claman with more.

Scandal-plagued Wells Fargo has agreed to pay $575 million to a number of states to settle claims related to the notorious fake bank account scandal and allegations of other deceptive practices, The Wall Street Journal reported on Friday.

Continue Reading Below

States have been investigating Wells Fargo for the phony account scandal – discovered about two years ago – whereby employees of Wells Fargo’s retail banks allegedly set up as many as millions of phony accounts for customers without their consent or knowledge in order to meet sales targets. Since then the bank has dealt with a slew of major issues across many of its businesses.

Reuters reported that the settlement would also cover allegations of improper insurance referrals and auto loan insurance, in addition to wrong mortgage rate lock extension fees.

A person familiar with the matter told the Journal that the payout would need court approval.

A spokesperson for Wells Fargo did not immediately return FOX Business’ request for comment.

Wells Fargo paid a $185 million fine in 2016 as a penalty for the phony account scandal.

The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency announced in June that Wells Fargo had agreed to pay a $1 billion fine as part of a settlement after the bank allegedly forced an auto loan insurance program onto hundreds of thousands of consumers who did not need it and mischarged consumers for certain mortgage interest rate lock extension products.

Earlier this year, the Justice Department announced that the bank would pay a civil penalty of more than $2 billion for allegedly misrepresenting the quality of its residential mortgage-backed securities in the run-up to the financial crisis.