Wells Fargo Agrees to Settlement in Class Action Lawsuit Over Phony Customer Accounts

Wells Fargo has agreed to pay $110 million to settle a 2014 California class action lawsuit, which was filed over bank employees creating two million bank and credit card accounts without customers’ knowledge or authorization. According to a Forbes news report, Wells Fargo has agreed to pay the $110 million as remediation for all people who said they were affected by the phony accounts. Customers accused the bank of opening accounts in their name or enrolling them in a product or service without consent.

A Huge Scandal

In some cases, employees had submitted an application for a banking product without customers’ consent. The bank has already issued an apology for these sales practices and has even revamped its compensation structure. Employees will no longer receive bonuses that are tied to the number of banking products a customer has.

The phony accounts essentially earned the bank unwarranted fees and allowed Wells Fargo employees to boost their sales figures and make more money. Employees were encouraged and did open these unauthorized accounts, about 1.5 million of them, to hit sales targets and get bonuses. The bank fired 5,300 employees over the last few years over these shady accounts. Many employees even went so far as to create fake PIN numbers and email addresses to enroll customers in online banking services. This highly unethical and fraudulent practice was in fact widely prevalent at Wells Fargo.

What This Settlement Does

The $110 million settlement still needs to be approved by the courts. Once the court approves the settlement, money will be paid out to the class members. The bank expects this settlement to resolve 11 other pending class action lawsuits that allege consumers were enrolled in banking products without their authorization.

After the deduction of fees and costs for prosecuting the suit and administering the settlement, class members will receive money to compensate them for losses resulting from the bank’s actions. This includes fees or charges they incurred because of the opening of the fake accounts.

Not the Only Bank to Cheat Consumers

Wells Fargo apparently was not the only bank in the country to defraud consumers in this manner. The U.S. Consumer Financial Protection Bureau, which was set up after the 2008 Wall Street meltdown, fined Citibank $70 million last year and ordered the company to refund nearly $700 million to nine million customers who were victimized by Citibank’s deceptive marketing campaigns and hidden fees. Back in 2015, PayPal was ordered to pay $25 million in fines and customer refunds after regulators determined that it signed up customers for credit card accounts without authorization. In July 2016, Santander Bank was fined $10 million for a vendor’s allegedly fraudulent billing of customers for services they did not authorize.

How Can You Protect Yourself?

The best action to take is to be proactive, according to consumer advocates. Here are some of the steps you can take to protect yourself against these types of scams:

If you have been victimized by unjust fees or phony accounts, a class action lawsuit lawyers may be the best remedy for you. When consumers band together in class actions, they gain power as they seek vindication on behalf of every customer who was harmed by the bank’s fraudulent practices. It would be in your best interest to contact an experienced Orange County class action lawyer who handles similar cases.

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