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Wells Fargo agrees to $1B settlement over loan scamsby Justin King
The settlement is related to mandatory insurance for auto loans and mishandling of mortgages.
Wells Fargo has agreed to a $1 billion settlement with the Consumer Financial Protection Bureau, resolving allegations of illegal activity related to the company's auto loans and mortgages.
The company violated the Consumer Financial Protection Act by purchasing auto insurance on auto loan borrowers' behalf -- even if they already had qualifying coverage from a third-party insurer.
In one case, Wells Fargo unexpectedly raised a borrower's monthly payment from $280 to $375 after improperly adding an insurance policy. The customer's regular payments were always higher than the initial minimum, but he did not notice the unexpected increase and consequently lost the car through repossession.
"While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them as we deliver our commitments with focus, accountability, and transparency," Wells Fargo CEO Timothy J Sloan said in a statement.
The consent order requires Wells Fargo to remediate harmed customers and reform its risk management and compliance procedures.
"As to the terms of the settlement: we have said all along that we will enforce the law," said CFPB acting director Mick Mulvaney. "That is what we did here."