Wells Fargo Agrees to Settle Fake Accounts Lawsuit; Will Pay $110M

Wells Fargo
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Wells Fargo & Co (NYSE:WFC) has signed an agreement to settle a class action lawsuit concerning the lender’s retail sales practices.

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The lawsuit, filed in May 2015 in the Northern District of California, alleges that Wells Fargo’s employees opened more than 2 million deposit and credit-card accounts in a bid to boost their own salary, Bloomberg News reported.

In a statement, Wells Fargo said that the settlement covers all persons who claim that the bank opened an account in their name without consent, enrolled them in a product or service without consent, or submitted an application for a product or service in their name without consent during the period from January 1, 2009, through the date the settlement agreement is executed.

The settlement also covers claims in 11 other pending class actions filed across the country, including 10 in San Francisco federal court.

“This agreement is another step in our journey to make things right with customers and rebuild trust,” Wells Fargo President and CEO Tim Sloan said in a statement.

The bank said that it will pay $110 million to the settle the lawsuit. After attorneys’ fees and costs of administration, class members will be paid first for out-of-pocket losses such as fees incurred due to unauthorized account openings. The remaining amount, after out-of-pocket losses, will be split among all claimants, based on the number and kinds of unauthorized accounts or services claimed, Wells Fargo & Co (NYSE:WFC) said.

“We want to ensure that each customer impacted by our sales practices issue has every opportunity for remediation, and this agreement presents an additional option. We continue to encourage customers to contact us directly so that we can act quickly to refund fees and address any concerns,” Sloan added.

The settlement amount of $110 million will be set aside for customer remediation. After attorneys’ fees and costs of administration, class members will be paid first for out-of-pocket losses, such as fees incurred due to unauthorized account openings.  Amounts remaining after out-of-pocket losses will be split among all claimants, based on the number and kinds of unauthorized accounts or services claimed.

The settlement agreement must be approved by the court.

Six months ago, Wells Fargo agreed to pay $185 million in fines and penalties as part of a settlement with federal regulators and the Los Angeles city attorney’s office.

Shares of Wells Fargo & Co (NYSE:WFC) were trading up 1.03% in in the after-hours session. The stock has gained 14.44% during the last 12 months.

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