Last September, news outlets were abuzz with reports that one of the world’s most recognizable financial institutions had admitted that its employees had fraudulently opened millions of unauthorized accounts on behalf of the bank’s customers. At the time, Wells Fargo & Company agreed to a settlement under which it would pay nearly $190 million to government entities and consumer protection agencies.
As a business law attorney, I watched with interest as the situation unfolded, but I was hesitant to believe the matter was completely closed. What about the customers who had unauthorized accounts opened in their names? Did they see any of that settlement money? It turns out that only about $5 million of the initial settlement went to affected customers. That, however, will soon be changing.
Class Action Settlement
The settlement in September resolved claims filed by several government entities including the Consumer Financial Protection Bureau and the city and county of Los Angeles, California. Since that time—private lawsuits actually began before the matter went public last fall—legal action has been underway on behalf of the defrauded Wells Fargo customers. Lawyers for the plaintiffs were set to argue that cases should be combined into an action before a single federal judge, but the company preempted the need for consolidation by agreeing to a new settlement.
This time, the San Francisco-based bank will pay $110 million to class members who alleged that the institution opened an account, submitted an application, or enrolled them for a product or service without their consent. The settlement is intended to cover the customers’ losses as well as other damages and attorneys’ fees.
Restoring Consumer Trust
The revelations in September led to the resignation of then-CEO John Stumpf and the termination of more than 5,000 Wells Fargo employees involved in the scandal. Stumpf’s successor, Tim Sloan said that the new settlement is “another step in our journey to make things right with customers and rebuild trust.”
Despite its recent high-profile troubles, Wells Fargo is still the third-largest American bank, trailing only JP Morgan Chase and Bank of America. As such, individuals and businesses around the country rely on the security of Wells Fargo’s asset base.
Let Us Help
If you are looking for a bank to finance your next business venture or for a relatively simple business operating account, it is important to choose an institution you can trust. It is also crucial to carefully review and understand all the terms and conditions that are usually including in any banking agreement. Contact an experienced Naperville business law attorney to learn more about your options for securing capital and choosing a financial institution that meets your needs. Call 630-756-1160 today.