Wells Fargo Bank N.A. will pay over $6 million to Massachusetts to resolve allegations that it violated state consumer protection laws by using various unfair and deceptive practices against customers.

This settlement is part of an overall $575 million settlement with attorneys general from all 50 states and the District of Columbia that will resolve allegations that Wells Fargo opened millions of unauthorized accounts and enrolled customers into online banking services without their knowledge or consent.

It will also resolve allegations that the bank improperly referred customers for enrollment in third-party rental and life insurance policies, improperly charged auto loan customers for force-placed and unnecessary collateral protection insurance, failed to ensure that customers received refunds of unearned premiums on certain optional auto finance products, and incorrectly charged customers for mortgage rate lock extension fees.

“Wells Fargo repeatedly took advantage of its own customers by opening unauthorized accounts in their names and charging hundreds of dollars in illegal fees,” Attorney General Maura Healey said in a statement. “This settlement is a warning to all retail banks that Massachusetts will take action to protect our residents from financial harm.”

The states alleged that Wells Fargo imposed aggressive and unrealistic sales goals on bank employees and implemented an incentive compensation program where employees could qualify for credit by selling certain products to customers.

The states further alleged that Wells Fargo’s sales goals and the incentive compensation program created an impetus for employees to engage in improper sales practices in order to satisfy such sales goals and earn financial rewards.

Those sales goals became increasingly harder to achieve over time, the states alleged, and employees who failed to meet them faced potential termination and criticism from their supervisors.

The states also alleged that Wells Fargo improperly charged premiums, interest and fees for force-placed collateral protection insurance, and failed to ensure that consumers received proper refunds of unearned portions of option Guaranteed Asset/Auto Protection products.

The states further alleged the bank improperly charged residential mortgage loan consumers for rate lock extensions fees even when the delay was caused by Wells Fargo, a practice contrary to the bank’s policy.

In addition to paying $575 million to the states, Wells Fargo has agreed to implement a program within 60 days for consumers who believe they were affected by the bank’s conduct, but fell outside the prior restitution programs.

Wells Fargo will create and maintain a website for consumers to access a program that will allow them to be reviewed for potential redress and will provide periodic reports to the states about ongoing efforts.

More information on the redress review program, including Wells Fargo escalation phone numbers and the Wells Fargo dedicated website address for the program, will be available on or before Feb. 26, 2019.

Wells Fargo has previously entered into consent orders with federal authorities – including the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau – related to the alleged conduct. Wells Fargo has committed to or already provided restitution to consumers through its agreements with the OCC and CFPB as well as through settlement of a related consumer class-action lawsuit.

Wells Fargo to Pay Over $6M to MA for Cheating Customers

by State House News Service time to read: 2 min
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