Wells Fargo
Just last week, Senator Sherrod Brown accused Wells Fargo of failing to disclose that the bank forced insurance on as many as 570,000 borrowers who did not need it. Wells Fargo stated that it first became aware of this in July 2016 (after customers began to complain); however, former CEO John Stumpf did not disclose any of this to Congress until September 2016. Because of heightening pressure, Stumpf eventually resigned. Tim Sloan has since denied that Wells Fargo attempted to hide the problem.
Wells Fargo blamed the unnecessary auto insurance on various "flaws" in the bank's system which was set to verify that all customers had insurance and automatically placed borrowers in auto insurance if their policies were expired. Currently, the bank is planning on contacting over 108,000 customers to address the complains about these fees and charges. Previously, Wells Fargo had a fake account scandal. However, they claim that this is different because employees were not incentivized by sales goals to increase car insurance sales. As it turns out, Wells Fargo set unrealistic sales goals and encouraged bonuses which led workers to open over 3.5 million unauthorized credit card and bank accounts.
Most importantly, Wells Fargo stated that it will refund customers who paid mortgage rate lock extension fees that were requested from September 16, 2013 through February 28, 2017. That's an attempt to win back trust following their scandal. The deadline to file a claim is February 3rd and can be done so through wfsettlement.com or by mail. Many people will be automatically enrolled and will not have to request claim forms. The $142 million settlement will resolve a federal class-action lawsuit and is completely separate from previous settlements that the bank has reached regarding other scandals. In the settlement, customers and individual businesses will be able to seek reimbursement and can even file claims to be compensated for damage to credit scores which resulted in higher interest rates on loans. Only those whose credit score was lowered to the point at which they were put into a higher tier of credit risk will be able to qualify for this additional reimbursement.
According to the settlement notice, the bank has hired experts to determine the amount that customers will be reimbursed (which will most likely depend on the length of the loan and the increased borrowing cost). Any money that will be remaining after those claims are paid will be distributed among affected account holders (based on the number of unauthorized accounts each had). Many U.S. senators, including Elizabeth Warren, have continued to criticize Wells Fargo CEO and question his competence claiming that the bank has not made enough reforms. As a result of all the scandals hitting Wells Fargo, it is only a matter of time before Tim Sloan is replaced as acting CEO.
- http://money.cnn.com/2017/10/03/investing/wells-fargo-lie-congress-hearing-auto-insurance/index.html
- http://www.mcall.com/business/consumer/mc-nws-wells-fargo-fake-account-settlement-claims-watchdog-20171002-story.html
- https://www.cnbc.com/2017/10/04/wells-fargo-needs-to-appoint-a-new-ceo-immediately-commentary.html
