What’s up with Wells Fargo? An updated scandal timeline
Inside Subprime: April 20, 2018
By Caroline Thompson
American banking giant Wells Fargo has had a tough year in the press. Every new day brings a fresh new set of legal battles for the bank, which has been forced to pay millions in restitution and has had several major resignations and reorganizations after a slew of illegal banking practices have, one by one, come to light. We’ve reported on many of these scandals as they’ve surfaced, so we put together a scandal timeline to help keep track of all the lawsuits, and help readers who have Wells Fargo bank accounts, credit cards or loans figure out how exactly these reports of misconduct affect them.
September 8, 2016
The Consumer Financial Protection Bureau, along with the Los Angeles City Attorney and the Office of the Comptroller of the Currency fine Wells Fargo $185 million for opening up bank and credit card accounts in customers’ names without their knowledge or consent. More than two million fake accounts were opened, and customers were scammed out of millions in fees and fines on accounts they – in many cases – did not even know they had. 5,300 Wells Fargo staffers were fired over the scandal, which was designed to help employees meet their sales goals and earn bonus pay.
September 19, 2016
Then-CEO John Stumpf testifies in front of Congress, and says all customers affected by the scandal will be reimbursed. Senator Elizabeth Warren calls for his resignation and asks him to forfeit his salary.
September 27, 2016
Carrie Tolstedt, who was the head of the retail division at the center of the fake accounts scandal, resigns ahead of her scheduled retirement. She receives no severance or equity awards, and the sales goals that spurred employees to create fake accounts in the first place are removed. Stumpf announces he will forfeit about $41 million in uninvested equity awards, and will not receive a salary as the investigation into bank continues.
October 12, 2016
Stumpf resigns as CEO, and Tim Sloane is named as his successor. Stumpf leaves with a $133 million retirement package.
A group of Latino borrowers from California file a class-action lawsuit against Wells Fargo alleging discrimination in access to credit and loans based on their immigration status.
The bank fires four more managers with ties to the fake accounts scandal. Announces no 2016 bonuses will be issued for any of the terminated employees or eight senior executives, including new CEO Tim Sloane.
Philadelphia files a lawsuit against Wells Fargo for allegedly targeting minority borrowers for bad loans. The city of Philadelphia also drops Wells Fargo as its payroll bank in favor of Citizens United. Wells Fargo files a motion to dismiss the discriminatory lending lawsuit.
June 14, 2017
Wells Fargo is accused of making improper changes to customers’ mortgage contracts. While the changes lowered the monthly payments, they extended the terms of the borrowers’ loans by decades, forcing them to pay back thousands more in the long run.
July 27, 2017
Wells Fargo admits to signing up 570,000 auto borrowers for car insurance they didn’t need. Many victims of this scam could not afford both the unnecessary insurance and their car payments, and ended up falling behind on payments as a result. The bank agrees to pay $80 million in refunds to affected customers.
August 3, 2017
A U.S. District Judge rules that the young immigrants denied credit by Wells Fargo for not bring U.S. citizens can sue the bank for discrimination.
August 4, 2017
The bank agrees to pay $108 million to settle a lawsuit alleging it overcharged veterans under a federal mortgage refinancing program. The lawsuit claims the bank secretly charged military veterans hidden fees that are, under a U.S. Department of Veterans Affairs loan guaranty program, not applicable to veteran borrowers.
August 11, 2017
U.S. District Court files a lawsuit against Wells Fargo for years of overcharging small businesses for processing credit card transactions and imposing illegal fees on bank accounts.
August 24, 2017
Lawyers for Wells Fargo call for an eight-year old, country-wide class-action lawsuit, alleging the bank reordered transactions in order to increase customer overdraft fees, to be thrown out. The bank wants the court to toss the class-action suit and force each individual victim of the scam to pursue separate arbitration. Wells Fargo is currently the only major U.S. bank still fighting these charges; nearly all their competitors settled on similar accusations years ago.
August 31, 2017
The bank announces that it has uncovered up to 1.4 million more fake accounts, bringing the total number up from 2.1 million to a whopping 3.5 million. It will now pay $6.1 million in customer refunds instead of the $3.3 it was originally slated to pay back. In a statement, CEO Tim Sloan expressed regret for the hurt the ever-expanding scandal has caused customers, saying: “We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank.”
September 4, 2017
A former loan officer at the Beverly Hills, CA branch of Wells Fargo reveals the bank has been cheating mortgage customers who were refinancing their homes. Less than a week earlier, a class-action lawsuit was filed against the bank for the same practice. Essentially, Wells Fargo has been purposely delaying mortgage loans and refinances, then tricking customers into paying for “rate lock” or extension fees in order to keep their interest rates at previously agreed-upon levels.
September 29. 2017
A teller at a Wells Fargo branch in Washington, DC has been accused of stealing $185,000 from a homeless customer, who tried to deposit that money into an existing account, but didn’t have the identification needed to complete the transaction. Instead, the teller opened new accounts in the man’s name, including an ATM and PIN, and used the money on lavish vacations and a down payment on a house.
October 2, 2017
Nearly 2,000 workers who were fired in the wake of the fake accounts scandal have been hired back, according to Wells Fargo CEO Tim Sloan.
October 3, 2017
Sloan undergoes yet another round of Congressional grilling on both the bank’s fake accounts scandal and hidden arbitration clauses. While Sloan claims Wells Fargo would not prevent customers from banding together and suing, lawyers for the bank seem to be doing just that in Utah.
October 16, 2017
Wells Fargo profits continue to fall as the bank reports its third-quarter earnings. Year over year, revenue is down 2 percent from 2016, and their loan portfolio has shrunk for the third consecutive quarter.
November 17, 2017
Franklin Codel, head of consumer lending at Wells Fargo, was fired this week over “a communication he had with another former executive about that person’s firing.” According to NBC News, Codel violated company policies in the dismissal of the unnamed employee. The embattled bank said in a statement that Codel had behaved “in a manner that was contrary to the company’s policies and expectations of its senior leaders.”
February 2, 2018
The Federal Reserve announces that, in retribution for the bank’s “widespread consumer abuses,” Wells Fargo will have an assets cap imposed to prevent growth until it can prove it has changed its ways. “We cannot tolerate pervasive and persistent misconduct at any bank,” outgoing Fed Chairwoman Janet Yellen said in a statement.
April 20, 2018
The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency announces that Wells Fargo will face a $1 billion penalty for their deceptive car insurance and mortgage schemes. The bank was found to be charging as many as 570,000 Wells Fargo customers for car insurance they didn’t need, which resulted in around 20,000 customers defaulting on their car loans and having their vehicles repossessed. Additionally, the bank revealed in October that many of its mortgage borrowers were “inappropriately charged for missing a deadline to lock in promised interest rates, even though the delays were Wells Fargo’s fault.”
The bottom line:
We’ll update this timeline as more news comes in, but for now, our advice for Wells Fargo customers is to try and diversify your assets. Check out local credit union options, and invest your money elsewhere if at all possible. If you suspect you’ve been a victim in any of these cases of fraudulent activity, check your credit report immediately. If you see any funny business, alert the credit bureaus, freeze your accounts, and consider submitting a complaint with the Consumer Finance Protection Bureau. For more resources, check out this article from the Journal Sentinel on actions Wells Fargo customers can take to protect themselves from further damage from the bank.
Check out these related links and articles from OppLoans:
- Wells Fargo dealt two more legal blows, overdraft fees are up and a West Virginia couple sues for predatory lending
- Master your money with OppU, free interactive courses from OppLoans
- Learn more about personal installment loans
- Why payday loans are a dangerous debt trap