Wells Fargo & Co finally agreed to pay $110 million over a lawsuit that was filed by customers who complained that there were over 2 million accounts its employees opened for them without their approval. The bank announced this announcement on Tuesday. This will be the first private settlement that they have reached since the company paid $185 million to the federal and California authorities last year. Authorities said that the workers were driven by high pressures which made them open bank and credit accounts without customers’ authorization and they even used forged signatures.
They also revealed that there was a federal regulator that had downgraded its rating under a law meant to help in monitoring and promoting banking practices to the minority and low-income earners. This move restricts Wells’ business which includes opening more branches.
This funds settlement will include the clients who had opened new accounts without their authorization. This will go even for those who were signed up for products they did not agree to which goes back to Jan 1, 2009.
Wells Fargo said that they believe that the settlement will help resolve the other 11 pending lawsuits filed against it. However, Wells stated that they are refraining from insisting on their right to take the customers into third-party arbitration instead of going to the court.
They said that after paying the $110 million, they would cover the customers’ out of pocket losses or any fee that they might have incurred through the unauthorized accounts. The rest of the money will then be split among the impacted customers.
The San Francisco-based bank has been experiencing a decline in new account openings, and it has been working to restore the customers’ trust. This scandal has led to the retirement of its chief executive, John Stumpf. Wells has since then changed its sales practices and had called millions of customers to check if their accounts were opened genuinely.
Some of the named plaintiffs include Shahriar Jabbari from California and Kaylee Heffelfinger from Arizona. The two had two accounts each from Wells, but the bank had opened nine and seven accounts respectively for them without their approval.
This bank still has a lot of work to do to restore the customer’s trust, but they are doing the best they can.