Wells Fargo said it is expanding a class-action settlement over the bank’s fake accounts, opening the deal up to customers affected by the scandal as far back as May 2002 following findings from its recent board investigation. Paul Sakuma AP
Wells Fargo said it is expanding a class-action settlement over the bank’s fake accounts, opening the deal up to customers affected by the scandal as far back as May 2002 following findings from its recent board investigation. Paul Sakuma AP

Bank Watch

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Bank Watch

Why Wells Fargo is expanding a class-action settlement over its sales scandal

April 21, 2017 1:31 PM

Wells Fargo said it is expanding a class-action settlement over the bank’s fake accounts, opening the deal up to customers affected by the scandal as far back as May 2002 following findings from its recent board investigation.

The move announced Friday eliminates an earlier cutoff of January 2009 and increases the size of the settlement, raising it to $142 million from $110 million previously, the San Francisco-based bank said. The alterations come after last week’s release of the board’s report on the scandal, in which employees for years opened accounts in customers’ names without their permission to meet aggressive sales goals.

Friday’s action marks the latest effort by Wells to move past the scandal, which has tainted the image of the third-largest U.S. bank, cost the former CEO and other executives their jobs and led to lost business across the company.

CEO Tim Sloan, in a statement, said expanding the settlement is “another important step to make things right for our customers.”

“On our journey to rebuild trust, we want to ensure our customers feel confident that we have heard their concerns about retail sales practices, which includes offering them numerous opportunities for remediation,” Sloan said.

The settlement’s class will now include all customers who claim Wells opened an account in their name, enrolled them in a product or service or submitted an application for a product or service without their consent from May 1, 2002, through April 20, 2017, the bank said.

Wells said customers who were charged fees over such accounts from January 2009 to April 2017 will be eligible for a reimbursement in the amount of the actual fees charged, as determined by the settlement’s administrator.

A flat-rate fee reimbursement will be given to customers who received charges from May 1, 2002, to December 31, 2008, the bank said. Those reimbursements will be based on the average of fees paid to customers who file claims for 2009-2017 period, Wells said.

In addition to fee reimbursements, Wells Fargo said the settlement will also include compensation for damages to customers’ credit caused by unauthorized accounts. Customers who believe they were affected by an unauthorized account or service can visit a branch or call 1-877-924-8697, the bank said.

The $142 million deal settlement, which still requires court approval, is expected to be subject to attorneys fees and other costs, making unclear the final figure that will be available to customers.

The settlement stems from a class-action lawsuit filed in May 2015 by a Wells Fargo customer in California, Shahriar Jabbari, who claimed the bank opened seven accounts he did not authorize. In October, the Observer reported that the bank was quietly working on the settlement, which became official last month.

In its report last week on the scandal, the board pointed to Wells sales culture and a decentralized corporate structure that gave too much authority to leaders in the community banking unit where the improper behavior took place.

Friday’s decision also comes just days before Wells Fargo will face shareholders at the bank’s first annual meeting of investors since the scandal erupted in September.

The gathering Tuesday at Florida’s Ponte Vedra Beach could be tense, as it will give many shareholders their first chance confront management about the scandal.

Deon Roberts: 704-358-5248, @DeonERoberts

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