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FINANCIAL NEWS

Wells Fargo damages payments: Who will receive the money, how much and how to claim it?

Wells Fargo settled a lawsuit brought against it by the government in which it will pay over $2 billion directly to customers harmed by “illegal activity.”

Update:
Which customers will receive damage payments from Wells Fargo?
Stephanie KeithREUTERS

Wells Fargo settled a lawsuit brought against it by the Consumer Financial Protection Bureau (CFPB) for a range of “illegal activity,” ranging from incorrectly applied fees and interest rates to wrongful foreclosures and unwarranted auto repossessions. The financial institution has agreed to pay than $2 billion directly to over 16 million customers affected between 2011 and 2022 as part of the $3.7 billion settlement. The remainder of the settlement will go to the victims’ relief fund.

“The CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country,” said CFPB Director Rohit Chopra. “This is an important initial step for accountability and long-term reform of this repeat offender.”

Wells Fargo is required to notify customers who are eligible to receive damage payments and many already have. Here’s who may be eligible for a payment for financial harm from the bank’s activities.

Well Fargo customers eligible for damage payments

The violations that the CFPB encountered occurred across many of the Wells Fargo’s largest product lines including auto and mortgage loans and regular bank account holders. The “illegal practices”, included “misapplied payments, wrongful foreclosures, and incorrect fees and interest charges.”

Auto loan customers

According to the CFPB, some Wells Fargo customers who prepaid for GAP coverage and terminated their loan early were not refunded money. Other customers’ loan repayments were not applied correctly to their balances which resulted in higher interest charges, late fees, and wrongful repossessions, some of which were then mismanaged after the fact.

Mortgage loan borrowers

Some mortgage loan borrowers may be eligible for damages whose requests for modifications to their loan to avoid foreclosure were unfairly turned down. As well they may have been charged incorrect fees and other costs. Customers may be eligible for damage payments for wrongful foreclosures or reporting errors that resulted in loan applications being denied when they should have been approved.

Bank account holders

Customers who experienced surprise overdraft fees on debit purchases and ATM withdrawals even though they had adequate funds in their accounts at the time of the transaction may be eligible for compensation under the settlement agreement. Likewise, those customers who were unfairly charged monthly fees despite the bank’s advertised no fees for 10 or more purchases with their debit card. Wells Fargo must pay damages to some customers whose money was unfairly “frozen” for weeks when the bank suspected a single deposit was fraudulent.

How much will Wells Fargo customers receive in damages?

Damage payments vary depending on how you were affected according to the CFPB. Those who experienced automobile repossessions could receive at least $4,000 but may be entitled to a higher amount. Around 3,200 customers who were unable to modify their mortgage payments to avoid foreclosure will receive on average $24,125 in damages each. Account holders who were unfairly charged fees could get $100 on average.

What steps should Wells Fargo customers affected take?

While the financial institution told CNBC that it has already “proactively communicated with most of the customers who may have been impacted by the matters covered in the settlement,” it is still working to contact all those covered by the settlement.

The CFPB advises those who think they may be affected to contact Wells Fargo customer services at 844-484-5089, Monday through Friday from 9:00 am to 6:00 pm ET, as a first step. Should you receive no action on your claim, you can file a complaint directly with the CFPB online.

The agency also advises to be aware of scams of people claiming they can get you any compensation that ask for money upfront. Should this happen to you, the CFPB advises to call (855) 411-2372, 8 am to 8 pm ET, Monday through Friday, immediately.