Wells Fargo has agreed to pay $110 million to settle a class action lawsuit for up to 2 million fake accounts that were created in consumers’ names without their permission. According to a CBS Los Angeles news report, this is the first private settlement that the bank has reached since the company paid $185 million to federal and California authorities late last year.
Officials alleged that bank employees, who were driven by high-pressure sales tactics, opened the bank and credit card accounts without customer authorization. The settlement will include customers who had accounts opened without their authorization or were signed up for a product they did not agree to. These violations go back January 1, 2009. CBS talked to a Mar Vista resident who had 16 accounts opened in his name without his consent raking up hundreds of dollars in low balance, overdraft and other charges.
Ongoing Lawsuits and Criminal Probe
This is not the end of the road for Wells Fargo. The fallout from this fake accounts scandal is expected to be enormous – as it should be. There are still whistleblower lawsuits pending as well as a criminal probe that is ongoing. This settlement, still pending court approval, is expected to resolve 11 other pending class action lawsuits filed over the fake accounts.
Wells is waiving its right to take customers into what is known as a third-party arbitration, which allows the banks to take customer complaints to a private mediator instead of a court of law. This practice has been controversial and consumer advocates for long have been pressuring banks to give up their right to arbitration because in such cases, the consumer always loses.
In response to the scandal, Wells has changed its sales practices, ousted other executives and called tens of millions of customers to check on whether they really opened up the accounts in question. The bank’s board of directors is also conducting an investigation into the bank’s sales practices and has cut bonuses for major executives.
Justice for Consumers
This is the first step in getting justice for consumers who have clearly been defrauded by the bank. Many unsuspecting consumers have been charged fake fees for accounts they didn’t approve or don’t even know exist. This is not just a loss of a few hundred or thousand dollars for consumers, but a breach of trust on the part of banks. How are consumers to trust the place that is supposed to keep their hard-earned money safe? Our California class action lawyers hope justice is served and that all consumers who were defrauded by Wells Fargo get the compensation they rightfully deserve.