The Consumer Financial Protection Bureau (CFPB) recently imposed its largest fine ever for consumer banking law violations. The agency’s action is a good reminder for other banks to review their own practices and may spawn class action litigation against the target bank and other banks.
On Tuesday, December 20, 2022, the CFPB entered a consent order with Wells Fargo that imposes a $3.7 billion fine for incorrectly charging fees and interest to the bank’s customers, among other violations. The fine, which consists of $2 billion in consumer damages and $1.7 billion in civil penalties is nearly four times the CFPB’s previous record fine.
The specific violations found by the CFPB involved automobile loan servicing, mortgage loan servicing, and consumer deposit accounts. The CFPB asserted that most violations were caused by issues in banking technology, employee training, internal controls, and compliance practices. Wells Fargo publicly stated that it has already paid most of the
$2 billion in damages back to consumers and will continue to work toward full compliance with the CFPB’s order.
With this consent order, the CFPB signals a continued, if not increased, vigor in enforcing consumer banking laws. The consent order serves as a reminder to banks and other financial institutions to perform reviews and ensure their services are operating in compliance with the law. The attorneys of Steptoe & Johnson’s Financial Services Team are experienced in and prepared to advise on internal compliance reviews.
Many times, plaintiffs’ attorneys will use a consent order to fashion civil suits against not only the target of the consent order but other banks, as well. The attorneys of Steptoe & Johnson’s Business Litigation Group, which includes the firm’s Class Action Team, are experienced in and ready to help with the defense of individual and class action suits against financial institutions.
For assistance or questions about this alert, please contact the authors or any member of the Steptoe & Johnson Financial Services Team, Business Litigation Group, or Class Action Team.