In September 2106, authorities found out that Wells Fargo opened up to 2 million fake accounts by using the names of their customers without their consent. This was in an attempt to meet sales targets that were later deemed unrealistic.
Since then, these sales targets have been eliminated. But the repercussions of the fake accounts continued. Just recently, Wells Fargo agreed to a $110 million preliminary settlement that will compensate every customer who can claim that an account has been improperly opened in their name.
What Does the Settlement Entail?
This settlement is supposed to cover a few lawsuits including a suit filed in September by customers, another one filed in the Northern District of California, and 10 others. This covers “all persons” who had an account opened in their name or who have been enrolled in a bank product or service for which they didn’t consent. The coverage starts from January 1, 2009.
This is a reversal of Well Fargo’s previous position by compelling wronged customers to engage in forced closed-door arbitration instead of engaging in open court. With this settlement, the bank hopes to “move forward and avoid further litigation.” The settlement agreement is still in its preliminary stage. It has to get court approval before it can be implemented. When preliminary approval is obtained, customers will receive a notice that will explain how they can make their claims.
It’s not yet perfectly clear how much money will go to each customer, as it is too early to tell how many of the customers will be included. The money will first go to attorney’s fees, and then it will be used to compensate for the out-of-pocket losses suffered by the customers. If there’s any money left after that, it will be split among the customers who are part of the class action suit, and the money for each customer will depend on how many accounts and the kinds of accounts that were opened in their name.
This settlement is separate from an earlier agreement that Wells Fargo made, in which the bank paid $3.2 million to the customers with more than 130,000 fake accounts. For that agreement, each customer received about $25. The customers who were part of this agreement can also take part in the new settlement.
How do people get paid?
In the aftermath of the scandal, Wells Fargo sales remain low. Its credit card applications have also dropped by 55% in February of 2017. The banks sales practices were altered and some executives were ousted. Other execs had their bonuses reduced.
It also means that if you have a bank account for which you pay regular fees, you need to check every little fee. You may be paying for services or accounts for which you gave no approval. You may not even know that you’re actually paying for these accounts and services at all. If this happens to you, consult a class action lawyer who specializes in bank fraud so that you can be compensated fairly for your losses.