Wells Fargo has agreed to pay $110 million to resolve class actions that allege bank workers opened unauthorized accounts in customers’ names or enrolled them in the bank’s services without their consent.
If the class action settlement is approved, class members would be reimbursed for out-of-pocket losses, such as fees incurred due to unauthorized account openings. After those losses are paid, along with attorneys’ fees and costs, the remaining amount would be split among all claimants, based on the number and kinds of unauthorized accounts or services claimed.
The proposed class would consist of anyone who claims that Wells Fargo opened an account in their name without consent, enrolled them in a product or service, or submitted an application for a product or service in their name without consent between Jan. 1, 2009, and the execution of the settlement.
If approved, the deal would mark an end to litigation following a CFPB investigation that uncovered that more than 5,000 Wells Fargo employees tried to meet aggressive sales targets by opening up approximately 1.5 million bank accounts and 565,000 credit cards without customers’ knowledge.
Wells Fargo has moved courts across the country to compel the individual customer plaintiffs to arbitrate their disputes pursuant to an arbitration provision contained in Wells Fargo’s deposit agreements. However, Congressional Democrats criticized this strategy and introduced legislation in December that would bar Wells Fargo and other financial institutions from enforcing arbitration agreements on accounts created without customer consent.
Approximately 5,300 employees were fired after the scheme was revealed, and in February, Wells Fargo’s board of directors voted to fire four senior managers in connection with an ongoing investigation stemming from the scandal. The unauthorized account scandal also cost John G. Stumpf, Wells Fargo’s former chairman and CEO, his job and $41 million in unvested stock. Stumpf resigned in October after getting grilled by members of Congress of both parties.