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15 WF TO PAY $3.7B IN FINES AND RESTITUTION e Consumer Financial Protection Bureau (CFPB) has reached a final agreement with Wells Fargo, which has been ordered to pay $3.7 billion for the widespread and sys- temic abuse of customers through misapplied loan payments, wrongfully seized homes and vehicles, adding extraneous fees or incorrectly applying interest rates which resulted in losses for over 16 million consumer accounts. e total judgment amount consists of a $1.7 billion civil fine and $2 billion to consumers hurt by Wells Fargo. e fine will go to the CFPB's Civil Penalty Fund, where it will be used to provide relief to victims of consumer financial law violations. Of the $2 billion in restitution, $1.3 billion will go toward auto lending accounts, $500 million to deposit accounts, and $200 million to mortgage ac- counts. "Wells Fargo's rinse-repeat cycle of violat- ing the law has harmed millions of American families," CFPB Director Rohit Chopra said. "e CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country. is is an important initial step for accountability and long-term reform of this repeat offender." e CFPB's specific findings include that Wells Fargo: • Unlawfully repossessed vehicles and bungled borrower accounts: Wells Fargo had systematic failures in its servicing of automobile loans that resulted in $1.3 billion in harm across more than 11 million accounts. e bank incorrectly applied bor- rowers' payments, improperly charged fees and interest, and wrongfully repossessed borrowers' vehicles. In addition, the bank failed to ensure that borrowers received a refund for certain fees on add-on products when a loan ended early. • Improperly denied mortgage modifica- tions: During at least a seven-year period, the bank improperly denied thousands of mortgage loan modifications, which in some cases led to Wells Fargo customers losing their homes to wrongful foreclo- sures. e bank was aware of the problem for years before it ultimately addressed the issue. • Illegally charged surprise overdraft fees: For years, Wells Fargo unfairly charged surprise overdraft fees—fees charged even though consumers had enough money in their account to cover the transaction at the time the bank authorized it—on debit card transactions and ATM withdrawals. As early as 2015, the CFPB, as well as other federal regulators, including the Federal Reserve, began cautioning financial institutions against this practice, known as authorized positive fees. • Unlawfully froze consumer accounts and mispresented fee waivers: e bank froze more than 1 million consumer ac- counts based on a faulty automated filter's determination that there may have been a fraudulent deposit, even when it could have taken other actions that would have not harmed customers. Customers affected by these account freezes were unable to access any of their money in accounts at the bank for an average of at least two weeks. e bank also made deceptive claims as to the availability of waivers for a monthly service fee. e agreement also forces Wells Fargo to immediately stop charging surprise overdraft fees and ensure that the unused portion of GAP insurance contracts is refunded to the borrower when a loan is paid off or otherwise terminates prematurely. e CFPB also calls Wells Fargo a "repeat offender" as they have been the subject of multiple enforcement actions in the past for other violations including faulty student loan servicing, mortgage kickbacks, fake accounts, and harmful auto loan practices. In a prepared statement issued after the deal was announced, Wells Fargo said that cur- rent leadership has made "significant progress to transform Wells Fargo." "As we have said before, we and our regulators have identified a series of unac- ceptable practices that we have been working systematically to change and provide customer remediation where warranted. is far-reach- ing agreement is an important milestone in our work to transform the operating practices at Wells Fargo and to put these issues behind us," said Charlie Scharf, Wells Fargo's CEO. "Our top priority is to continue to build a risk and control infrastructure that reflects the size and complexity of Wells Fargo and run the compa- ny in a more controlled, disciplined way." "We have made significant progress over the last three years and are a different company today," Scharf said. "We remain committed to doing the right thing for our customers and working closely with our regulators and others to deal appropriately with any issue that arises." Journal