Wells Fargo Fined $3.7 Billion for Mismanaging Auto Loans, Mortgages, Checking, and Savings Accounts
- Wells Fargo caused consumers financial harm by mismanaging different types of loans and accounts.
- The banking giant will be paying a fine to help compensate them.
- $2 billion of the $3.7 billion fine is earmarked for consumer compensation.
Talk about a major blunder on the part of a major bank.
Many consumers have struggled to keep up with their auto and mortgage loan payments this year due to surging inflation. And many have depleted their savings balances due to the higher living costs they've been forced to grapple with over the past 12 months.
But one banking giant and lender may have made financial matters exponentially worse for consumers at a time when things were already tough. And now, it's going to pay.
A massive fine
The Consumer Financial Protection Bureau (CFPB) has fined Wells Fargo to the tune of $3.7 billion for mismanaging consumer loans and engaging in illegal activities. Of that, $2 billion is earmarked for consumer compensation, while $1.7 billion represents a civil penalty.
So what exactly did Wells Fargo do wrong? For one thing, it illegally imposed fees and interest charges on auto loans and mortgages when it shouldn't have. That's a big oopsie.
Also, some consumers had their vehicles repossessed due to errors on the part of Wells Fargo in processing their auto loan payments. And the bank also charged consumers unlawful overdraft fees -- a practice banks have increasingly been moving away from.
Another bad move on Wells Fargo's part? Improperly denying homeowner requests for mortgage modification.
Borrowers who struggle to keep up with their mortgage payments are often allowed to modify the terms of their mortgages to make their home loans more affordable. To be clear, this isn't the same thing as refinancing. Refinancing means swapping one loan for another. With mortgage modification, consumers keep their existing loans, but the terms of those loans are altered.
But either way, Wells Fargo denied customers the option to modify their mortgages when it shouldn't have. And that led to some homeowners falling victim to wrongful foreclosures -- and losing their homes in the process.
Finally, Wells Fargo unlawfully froze more than 1 million consumer bank accounts on the premise of fraudulent deposits. Customers who were impacted by those account freezes were unable to access the money in their accounts for at least two weeks on average. Talk about not good.
Know your rights
When you're a borrower or someone who banks at a major institution, you might assume that any time you're assessed a fee or denied the option to change the terms of a loan, that that's just how things have to be. But clearly, that's not always the case.
If your bank or lender does something that doesn't sit right with you, whether it's imposing a surprise fee or denying what sounds like a simple request, seek out more information. Speak to a supervisor, and if that doesn't work, visit the CFPB's website to learn more about your rights as a consumer.
It may very well be that a lot of the missteps Wells Fargo took were made in error. But the fact that the banking giant is being fined billions of dollars tells us that its actions were just plain not okay. And if you have reason to believe you're being mistreated by a bank or lender, you shouldn't just take it lying down.
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