Wells Fargo: Proposed Class-Action Settlement for Retail Sales Practices Receives Preliminary Court Approval
July 09 2017 - 3:00PM
Business Wire
- Agreement will set aside $142
million for customer remediation claims back to May 2002
- Adds to remediation options for
customers
Wells Fargo & Company (NYSE: WFC) today announced updates to
the settlement agreement for a class-action lawsuit concerning
improper retail sales practices (Jabbari v. Wells Fargo & Co.,
et al.) following a July 8 order from the U.S. District Court for
the Northern District of California granting preliminary approval.
With the court’s preliminary approval of the settlement agreement,
Wells Fargo and the plaintiffs are preparing to issue notices that
will provide information about the process for making claims.
“We are pleased that the court found the settlement to be fair,
reasonable and adequate. This preliminary approval is a major
milestone in our efforts to make things right for our customers,”
said Tim Sloan, Wells Fargo’s President and Chief Executive
Officer. “It further ensures each customer impacted by an improper
retail sales practice has every opportunity for remediation. This
is in addition to our direct efforts to review accounts and provide
remediation. These efforts are fundamental to restoring trust with
all our stakeholders and building a better Wells Fargo for the
future.”
Wells Fargo expects this settlement to resolve substantially all
claims in 10 other pending class actions that allege unauthorized
accounts were opened in customers’ names or that customers were
enrolled in products or services without their consent.
Within the next three months, broad outreach to current and
former customers will begin, and notices will be issued to
potential class members that will provide information about the
process for making claims, and customers who believe they should be
included in this settlement will be able to submit claims. The
settlement agreement is subject to final court approval, which will
be required before payments are made to class members.
Wells Fargo offers multiple remediation options; reports
progress toward completion
The class-action settlement will add another option for customer
remediation and contributes to Wells Fargo’s ongoing work to make
things right for customers who were impacted by improper retail
sales practices. To date, our customer remediation efforts
include:
- $3.26 million in remediation amounts
previously paid under the stipulated judgment with the Los Angeles
City Attorney and under the Consumer Financial Protection Bureau
and Office of the Comptroller of the Currency consent orders,
covering the period May 2011 – mid-2015.
- $1.8 million in additional payments to
customers nationwide, from September 8th, 2016 to May 31st, 2017,
through Wells Fargo’s ongoing complaints process and free mediation
services.
- A voluntary review of accounts from
2009 – 2010 to determine possibly unauthorized accounts and
associated harm, and providing remediation to customers impacted by
improper retail sales practices during those two years, as well as
from January 2011 to September 2016, as required by the consent
orders. Wells Fargo expects to complete the review process and
commence remaining remediation for all these additional periods by
the end of the third quarter 2017.
- Offering an avenue for customers whose
credit was harmed by improper retail sales practices to seek
compensation by participating in the class-action settlement.
- Supporting customers who believe they
had an unauthorized account or service opened in their name,
regardless of when the issue occurred, by encouraging them to visit
a branch or call the company’s dedicated hotline:
1-877-924-8697.
Settlement Agreement Details
The settlement agreement sets aside funds for a total of $142
million for customer remediation and settlement expenses. It
includes a process to compensate customers for increased borrowing
costs due to credit-score impact associated with a potentially
unauthorized account. The process will be led by an independent
expert hired by class counsel. Compensation will be paid if a
customer’s credit score dropped because of a potentially
unauthorized account and the customer opened an authorized credit
product with any lender within time periods specified in the
agreement. The payments will take into account how much the credit
score declined, the type and size of the subsequent authorized
credit product, and other factors.
In addition, the amended settlement agreement includes a
provision designed to ensure that sufficient funds are available to
compensate all claimants. In the unlikely event that the $142
million settlement total is not enough to reimburse customers for
unauthorized account fees, compensate customers for harm to their
credit, pay attorneys’ fees and expenses, and have at least $25
million left over to distribute to all class members, Wells Fargo
will contribute additional funds to the settlement.
The settlement class will consist of all persons who claim that
Wells Fargo opened, without their consent, a consumer or small
business checking or savings account or an unsecured credit card or
line of credit or enrolled them, under certain circumstances, in
Identity Theft Protection services, in each case between May 1,
2002 and April 20, 2017. After attorneys’ fees and costs of
administration, class members will be paid first for out-of-pocket
losses, such as fees incurred due to unauthorized account openings.
Amounts remaining after out-of-pocket losses will be split among
all claimants, based on the number and kinds of unauthorized
accounts or services claimed.
Customers do not need to take any action at this time to be
included in the class subject to this agreement; however, as
always, they are encouraged to contact Wells Fargo to discuss any
account issues.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $2.0 trillion in
assets. Wells Fargo’s vision is to satisfy our customers’ financial
needs and help them succeed financially. Founded in 1852 and
headquartered in San Francisco, Wells Fargo provides banking,
insurance, investments, mortgage, and consumer and commercial
finance through more than 8,500 locations, 13,000 ATMs, the
internet (wellsfargo.com) and mobile banking, and has offices in 42
countries and territories to support customers who conduct business
in the global economy. With approximately 273,000 team members,
Wells Fargo serves one in three households in the United States.
Wells Fargo & Company was ranked No. 25 on Fortune’s 2017
rankings of America’s largest corporations. News, insights and
perspectives from Wells Fargo are also available at Wells Fargo
Stories.
Cautionary Statement About Forward-Looking Statements
This news release contains forward-looking statements about our
remediation progress and the settlement agreement, including the
expected scope of the settlement agreement and our expectations
regarding the cost to us of the settlement agreement. Because
forward-looking statements are based on our current expectations
and assumptions regarding the future, they are subject to inherent
risks and uncertainties. Do not unduly rely on forward-looking
statements as actual results could differ materially from
expectations. Forward-looking statements speak only as of the date
made, and we do not undertake to update them to reflect changes or
events that occur after that date. For information about
factors that could cause actual results to differ materially from
our expectations, refer to our reports filed with the Securities
and Exchange Commission, including the discussion under “Risk
Factors” in our Annual Report on Form 10-K for the year ended
December 31, 2016, as filed with the Securities and Exchange
Commission and available on its website at www.sec.gov.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170709005042/en/
MediaMary Eshet,
704-383-7777Mary.eshet@wellsfargo.comorInvestor RelationsJim
Rowe, 415-396-8216Jim.Rowe@wellsfargo.com
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