A federal judge has thrown a monkey wrench into settlement plans between Wells Fargo and customers affected by the bank’s fake-accounts scandal
After its massive fake-accounts scandal affected at least 2 million customers, Wells Fargo ousted its CEO and launched an internal investigation into its sales practices. It also agreed to a $142 million settlement with customers who had phony accounts opened in their names. But a federal judge reviewing the settlement is saying that $142 million might not be enough.
Wells Fargo originally proposed to settle the class-action lawsuit for $110 million. Last month, it announced that it had added $32 million to that figure in order to cover anyone who had a fake account opened in their name from 2002 on.
But US District Judge Vince Chhabria said he would only approve the settlement if Wells Fargo agreed to several conditions, according to the Los Angeles Times. Among those conditions: a guarantee that all customers would be fully compensated for their losses.
That could mean more work – and more expense – for the nation’s largest mortgage lender. As of right now, it’s not clear exactly how many customers were affected by the scandal, or how much money they lost. While $142 million could potentially cover the losses, Chhabria pointed out that it might also be well shy of the true sum.
“If Wells Fargo wants to make things right, how about a full compensation guarantee?” he said.
Chhabria outlined several conditions for the bank and the plaintiffs to review to make sure that all customers were fully compensated, the Times reported. Wells Fargo and the plaintiffs have two weeks to review his proposal.
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Philadelphia accuses mortgage lending giant of discrimination
Wells Fargo adds $32 million to fake-account settlement
Wells Fargo originally proposed to settle the class-action lawsuit for $110 million. Last month, it announced that it had added $32 million to that figure in order to cover anyone who had a fake account opened in their name from 2002 on.
But US District Judge Vince Chhabria said he would only approve the settlement if Wells Fargo agreed to several conditions, according to the Los Angeles Times. Among those conditions: a guarantee that all customers would be fully compensated for their losses.
That could mean more work – and more expense – for the nation’s largest mortgage lender. As of right now, it’s not clear exactly how many customers were affected by the scandal, or how much money they lost. While $142 million could potentially cover the losses, Chhabria pointed out that it might also be well shy of the true sum.
“If Wells Fargo wants to make things right, how about a full compensation guarantee?” he said.
Chhabria outlined several conditions for the bank and the plaintiffs to review to make sure that all customers were fully compensated, the Times reported. Wells Fargo and the plaintiffs have two weeks to review his proposal.
Related stories:
Philadelphia accuses mortgage lending giant of discrimination
Wells Fargo adds $32 million to fake-account settlement
