Published: Sat, December 29, 2018
Markets | By Erika Turner

Wells Fargo agrees to pay $575 million to resolve state investigations

Wells Fargo agrees to pay $575 million to resolve state investigations

A release from the Attorney General's Office says Kentucky will receive $2.8 million dollars as part of a $575 million multi-state settlement with banking giant Wells Fargo over alleged unfair and deceptive trade practices.

Under the new agreement announced on Friday, the bank will also create teams to review and respond to customer complaints about its banking and sales practices.

The deal ends investigations that began after federal regulators revealed in September 2016 that Wells Fargo employees had for years opened millions of unauthorized bank accounts in customers' names. Wells Fargo has committed to or already provided restitution to consumers in excess of $600 million through its agreements with the OCC and CFPB as well as through settlement of a related consumer class-action lawsuit, and will pay over $1 billion in civil penalties to the federal government.

California, Wells Fargo's home state, will get more than a quarter of the settlement funds because of the number of customers living there.

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During the same time span, Wells Fargo's auto loan division allegedly placed approximately 850,000 auto loan customers under force-placed Collateral Protection Insurance (CPI), which charged them additional monthly premiums for auto insurance coverage if Wells Fargo - and the third party company that serviced its auto loans - could not verify the customer had purchased their own auto insurance policy for the vehicle.

Reuters reported that the settlement would also cover allegations of improper insurance referrals and auto loan insurance, in addition to wrong mortgage rate lock extension fees.

Wells Fargo is grappling with containing a wave of scandals over the past year. The federal reserve will not allow Wells Fargo to grow its assets until it is satisfied that the bank has cleaned up its act.

As part of its settlement with the states, Wells Fargo has agreed to implement within 60 days a program through which consumers who believe they were affected by the bank's conduct, but fell outside the prior restitution programs, can contact Wells Fargo to be reviewed for potential redress.

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