Wells Fargo pays $575 million to settle state investigations

Wells Fargo pays $575 million to settle state investigations

Wells Fargo & Co WFC.N will pay $575 million to settle claims made by US states that the bank created phony accounts and committed other customer abuses, according to a statement by the Iowa attorney general's office.

The settlement also requires the bank to create a redress program for consumers not covered by a previously announced restitution program.

The deal ends investigations that began after federal regulators revealed in September 2016 that Wells Fargo employees had for years opened millions of unauthorized bank accounts in customers' names.

Wells Fargo customers who feel they've not received adequate restitution can request a review from a bank escalation team.

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.

According to the states, Wells Fargo also failed to provide proper refunds to auto finance customers who had purchased Guaranteed Asset Protection insurance policies, created to address situations in which a car buyer/borrower ends up owing more than a vehicle's value.

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

If a customer could not pay the monthly auto loan payment and the monthly CPI premium within a certain period of time, Wells Fargo would repossess the customer's vehicle.

"Wells Fargo customers entrusted their bank with their livelihood, their dreams, and their savings for the future", said Becerra.

The settlement comes after Wells Fargo was accused of violating state consumer protection laws. With rate lock extension, borrowers could "lock in" an ostensibly favorable interest rate, for a fee, even if their loans did not close within the defined rate lock period.

Wells Fargo is grappling with containing a wave of scandals over the past year.

The $17 million Wells Fargo payout to New Jersey is the sixth highest amount recovered among all jurisdictions participating in the multi-state settlement.

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