Wells Fargo Fined (Again) — The $3.7 Billion Scandal & Penalty


  • The Bureau of Consumer Finance has fined Wells Fargo $3.7 billion for repeated violations of the law.
  • These violations included incorrect loan payments, charging incorrect interest and fees, and wrongfully foreclosing homes and vehicles.
  • This is just the latest in a long string of bank scandals over the past decade.

On December 20, 2022, the Bureau of Consumer Financial Protection fined Wells Fargo $3.7 billion for repeated violations of the law. This is the largest fine the CFPB has ever imposed.

Wells Fargo has been in the news a lot over the last decade for a host of bad practices, resulting in fines from the CFPB, the US Department of Justice, and the US Securities and Exchange Commission.

We break down this latest scandal, some of the bank’s biggest past scandals, and explore what this means for you if you’re a Wells Fargo customer.

Why Was Wells Fargo Fined?

CFPB cited a list of legal violations in several key product lines. These violations include:

  • Misapplied mortgage payments and car loans
  • Charging the wrong interest and fees, including unforeseen overdraft fees
  • Falsely foreclosing homes and impounding vehicles
  • Improperly rejecting a mortgage loan modification
  • Failed to restore unused portion of GAP protection
  • Unauthorized freezing of customer accounts for two weeks or more due to faulty fraud detection systems
  • Making misleading claims about monthly service fee waivers

This breach affected more than 16 million customer accounts over several years, resulting in billions of dollars in losses.

Settlement Details

For its unfair and deceptive practices, the CFPB ordered Wells Fargo to pay record-breaking fines and take certain actions.

$3.7 Billion fine

Here’s a breakdown of the $3.7 billion fine.

$2 Billion to Paying Customers

Two billion dollars of fines will be used to repair affected consumers by:

  • Returned the wrong charge
  • Came home and auto loan overpayment
  • Compensate consumers whose homes or vehicles are improperly confiscated or repossessed
  • Restores the unused portion of GAP protection

$1.7 Billion Civil Sanctions

The remainder of the fine will go to the CFPB’s Civil Penalty Fund, which provides assistance to consumers affected by breaches of financial protection laws.

Other requirements

In addition to the monetary consequences, Wells Fargo must take the following actions.

Stop Charging Surprise Overdraft Fees

Surprising overdraft fees occur when there is enough money in the customer’s account to close a transaction at the time it was made, even if it results in a negative balance after it is cleared.

While these fees are not necessarily illegal, the CFPB has warned that “charging unanticipated overdraft fees is generally an unfair act or practice.” The agency has determined Wells Fargo fees fall into that category and has prohibited banks from charging these fees when the account has sufficient funds at the time the transaction is authorized.

Provide Refunds for Certain Auto Loan Add-ons

Guaranteed asset protection (GAP) is an auto loan addition that protects borrowers if their car is totally damaged or stolen. Standard auto insurance only reimburses you for the car’s current market value. GAP pays the difference between that amount and your loan amount.

If you paid for GAP insurance in advance, the bank will usually have to return some of your money if you pay off your loan early or sell your car before the loan expires. Wells Fargo must ensure they comply with these requirements from now on.

Other Wells Fargo Scandals and Fines To Date

This isn’t the first time Wells Fargo has been in the hot seat.

As CFPB Director Rohit Chopra said in the agency’s statement, the bank has demonstrated a “repeat-rinse cycle of lawlessness.” Wells Fargo’s many missteps led to the resignation of two former chief executives – John G. Stumpf in 2016 and Timothy Sloan in 2019.

The bank has been criticized for many violations and bad practices over the last decade. Grab a cup of your favorite drink because the list is long. (And this is only part of it.)

2012 fine

2015 fine

2016 fine

2017 fine

2018 fines

2020 fines

2021 Fine

What Does All This Mean for Wells Fargo Customers?

So how bad is Wells Fargo really compared to other banks? Should you consider taking your business elsewhere if you are a Wells Fargo customer?

As with most financial choices, there are pros and cons. Wells Fargo is one of the “big four” US banks, meaning it has many branches and ATMs across the US and offers a variety of services. It’s been in business since the 1850’s. The mobile app scores well — 4.8 out of 5 stars on the Apple App Store and Google Play.

That said, the overall customer opinion of the bank is not too hot. It gets 1.07 out of 5 stars on the Better Business Bureau and 1.2 stars out of 5 on Trustpilot.

Wells Fargo’s current chief executive, Charles W. Scharf, said the bank “is a different company today,” but that remains to be seen. What we do know for sure is that he has a sizeable track record of playing fast and loose by the rules. And Chopra cautions against assuming “Wells Fargo has moved past its old problems or that the CFPB’s work here is done.”

If Wells Fargo’s dubious practices worry you or you would prefer to distance yourself from a bank that has seen so many scandals, you are fully justified. Here’s how to switch banks if you go this route.

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