Wells Fargo has settled a class-action lawsuit for its fake account scandal for $142 million.
Wells Fargo & Co. will pay out $142 million in result of a class-action settlement to customers whose credit scores have been hurt by Wells Fargo employees’ highly-critical practices of creating fake accounts at bank countless branches.
The settlement has been approved by a California judge and was announced Sunday. The settlement will see the banking giant paying compensation if a customer’s credit score dropped because of a fake account and the customer opened a credit account with any lender between May 1, 2002 and April 20 this year.
The company stated that per-customer payment amounts have yet to be determined, but the issued payments will depend on “how much the credit score declined, the type and size of the subsequent authorized credit product, and other factors,” it said. Customers will be notified within the next 90 days with details on how to initiate a claim.
This settlement is the latest attempt by Wells Fargo to get past the fake-account scandal that has followed the company for years and led to major management shake-ups in 2016. To hit overly-aggressive sales targets, Wells Fargo branch employees were led to open up to 2.1 million accounts — for credit cards, checking and savings accounts and other financial products — without customer permission or knowledge for years, going as far back as 2002.
These created accounts drove the company’s sales and earnings for years, but initiated numerous customer complaints. Spurred, in part, by a December 2013 report on the dirty practices by the Los Angeles Times, federal and state regulators fined Wells Fargo $185 million in 2016.