Wells Fargo Bank Settlement

After years of creating millions of fake accounts for profit, Wells Fargo agreed to settle claims in February 2020. The bank will pay $3 billion to settle claims linked to its years of fraud, with an additional $500 million that will be returned to investors, as stated by the Securities and Exchange Commission. Between 2002 and 2016, Wells Fargo opened millions of unauthorized and fraudulent financial accounts. The banking giant also pressured customers to buy products that they had no interest in.

“Wells Fargo repeatedly misled investors, including through a misleading performance metric, about what is claimed to be the cornerstone of its Community Bank business model and its ability to grow revenue and earnings,” said Stephanie Avakian, co-director of the SEC’s division of enforcement.

According to the agreement, the SEC and US Justice Department said that Wells Fargo misled investors by creating millions of fake accounts to meet its quarterly and annual sales goals. It presented this to its investors as its strategy of creating additional wealth for the organization. The SEC referred to the strategy as “cross-sell” which was created by inflating “account and services that were unused, unneeded, or unauthorized.”

“This case illustrates a complete failure of leadership at multiple levels within the bank. Simply put, Wells Fargo traded its hard-earned reputation for short-term profits, and harmed untold numbers of customers along the way,” said US Attorney Nick Hanna said.  

The last update on the Wells Fargo settlement case was on October 19, 2020. The update carried the Court’s final approval of the settlement and the payment process had begun. All payments were issued to eligible class members and checks were to be mailed at the end of October 2020, with an extension through December 2020.

Claim forms are can no longer be submitted as the deadline was July 7, 2018. The Wells Fargo settlement includes customers who were allocated certain credit cards, lines of credit, unauthorized checking or savings accounts opened in their names, from May 1 2002 to April 20, 2017. All customers who were affected stand to get cash benefits that include:

• A payment to compensate you for fees you may have paid in connection with unauthorized accounts

• Cash to compensate you for damages caused by harm to your credit

• Plus, any money remaining in the fund, after paying the benefits above and all costs and expenses, will be paid out as additional compensation on per-account basis