Wells Fargo Deceives Consumers with Illegal Fees... 5 Trillion Won Compensation

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] U.S. major bank Wells Fargo has been ordered to pay a huge compensation for deceiving consumers by imposing illegal fees and interest during auto loans and mortgage processes.

According to the Associated Press, the U.S. Consumer Financial Protection Bureau (CFPB) announced on the same day that it had reached an agreement with Wells Fargo on a fine and compensation totaling $3.7 billion (approximately 4.8 trillion KRW).

Wells Fargo was fined $1.7 billion for illegally setting auto loan and mortgage fees and interest rates for more than 16 million customers. This is the highest fine ever imposed by the CFPB. Additionally, Wells Fargo must pay an extra $2 billion in compensation to consumers.

Rohit Chopra, Director of the CFPB, emphasized that "Wells Fargo is a habitual offender that put one in three Americans at potential risk of harm," and that regulatory authorities took this action due to repeated violations. He added, "This action is a significant first step toward long-term reform and accountability for repeat offenders."

Investigations revealed that Wells Fargo not only imposed illegal fees and interest on auto loan and mortgage customers but also wrongfully repossessed vehicles from some customers. Furthermore, it was found that thousands of requests for mortgage interest rate adjustments were unjustly denied.

Notably, this incident was disclosed while Wells Fargo was continuing improvement efforts to address faulty financial practices, following the controversy in 2016 when it opened millions of ghost accounts without customer consent.

Charlie Scharf, CEO of Wells Fargo, stated, "We found that unacceptable practices had continued," and said, "The agreement with the CFPB is part of Wells Fargo's efforts to change its operational practices." Wells Fargo expects a pre-tax operating loss of $3.5 billion in the fourth quarter, including CFPB fines and consumer compensation.

However, the CFPB pointed out that some of these violations occurred not in the past but this year. Director Chopra remarked, "Wells Fargo should not be seen as having overcome past problems."

Meanwhile, in the New York stock market late afternoon session, Wells Fargo's stock price was trading down 1.71% compared to the previous close.