Big Banks have definitely made a name for themselves in the United States, and not always for the right reasons. Take Wells Fargo, for example. This is a bank that is commonly grouped in with two other major banking institutions based in the country, Bank of America and JPMorgan Chase.
All three of these banks have found themselves in hot water more than a few times. In recent years, Wells Fargo has been in various types of trouble. They’ve had numerous lawsuits brought against them and have even found themselves in hot water against the United States government more than once.
Below are 10 of their biggest lawsuits in history. It’s worth noting that a couple of these lawsuits are actually still in litigation. That means that the amount of money listed is subject to change, depending on any new individuals that come forward or on any new developments in these cases.
10. Lying to Investors (2018) ($4 million)
When someone decides to invest money with their investment firm, they expect that the individuals representing them will do their best for them. That includes being truthful with regard to the amount of money invested or lost as well as the types of companies that are invested in.
You would think that when your investment adviser is also your banker, you would be able to trust them even more. However, that proved not to be the case when Wells Fargo was convicted of lying to investors on numerous occasions.
The allegations involved the fact that investment advisors with Wells Fargo lied to their clients in order to make money that they shouldn’t have been making in the first place. Keep in mind, it’s not the clients who were making money here, but the bank itself.
Investment advisers were tweaking what they were telling their clients and they were keeping pertinent information away from them so that the bank could then divert funds to their own organization as opposed to disbursing funds legally. After a while, a few investors caught on that something probably wasn’t right and a lawsuit was brought against the bank. Eventually, a class action lawsuit was brought against them to the tune of $4 million.
9. Securities Fraud (2018) ($4.8 million)
Securities fraud is certainly nothing to shake a stick at. Not only did Wells Fargo end up having to pay back $4.8 million in restitution, they also got in trouble with the United States government for committing a crime.
As such, they ended up under the scrutiny of the government from the time that this occurred until the present day. Even now, the bank’s tarnished reputation is something that may never be fully restored.
Why did this happen in the first place? Much of it has to do with the fact that the bank wanted to make more money than it would have been making if it had done things in a law-abiding manner.
As a result, it was eventually determined that the bank willingly committed Securities fraud so that it could make a bigger profit. In the end, it didn’t work out so well for the bank but as you will soon see, it didn’t really stop them from their behavior, either.
8. Lawsuit for Firing Employee (2010) ($5.4 million)
This lawsuit is somewhat different because it’s not a class action lawsuit like so many of the others on this list. Instead, it was brought against the company by a single person, a wealth manager that worked for the company who actually reported Wells Fargo for potential fraud.
As it turns out, the company was listening to his phone calls and when he placed one of those phone calls from his office, he was almost immediately fired. He contended that there was no reasonable excuse for his being fired and he eventually sued the company and won.
At the time, he was essentially being fired for blowing the whistle on a company that had been engaging in practices it should not have been engaging in to begin with. It was made worse by the fact that the company decided to fire him for his actions because he was actually trying to do the right thing and put a stop to it.
It took several years for the case to be finalized, but he was eventually awarded more than $5 million in restitution. He was also offered his job back, although it’s hard to understand why anyone would want to go back to work there after something like that happened.
7. House Foreclosures Due to Technical Issues (2018) ($8 million)
You might find it difficult to believe, but the bank actually foreclosed on numerous houses because they had a glitch in their computer system that told them that their customers were behind on their loans.
The thing is, these customers were not behind on their loans. In fact, the overwhelming majority of them were current. Even those who were a payment or so behind were nowhere near the level of delinquency required for foreclosure.
As opposed to admitting the computer glitch, the company merely continued foreclosing on these homes as if nothing had ever happened.
They actually had the nerve to act as if they hadn’t done anything wrong and they tried to foreclose on homes where people were current in their loans, still paying on them every single month. Obviously, this eventually resulted in a class-action lawsuit. It would have been much easier to have fixed the computer glitch or at the very least, to have admitted that there was a mistake on their end to begin with.
6. Improperly Repossessing the Cars of Service Members (2016) ($20 million)
As if the whole home foreclosure debacle wasn’t enough, they were also accused and eventually convicted of improperly repossessing the cars of service members. In this particular instance, it was service members who had been sent overseas for military duty.
In the cases where the payments on their auto loans were two to three months late, the company repossessed the cars without notifying anyone in advance. As opposed to trying to work with these individuals who were overseas and potentially facing late payments because of their time in service, the bank opted to merely repossess the cars and tell them after the fact.
Obviously, this is not something that boded well with any of the individuals that were involved, nor was it a matter of popular opinion in the general public.
The bank was eventually forced to pay $20 million in restitution for what they had done. In many cases, they were also forced to return the automobiles that had been repossessed, back to their original owners.
5. Mortgage Locks (2018) ($1 billion)
This is something that also got the bank in a great deal of trouble. They claimed that they would lock in mortgage rates for the overwhelming majority of their customers, then they turned around and raised those mortgage rates by as much as 10%.
This caused individuals who thought that they were locked in with a fixed-rate mortgage to see their monthly mortgage payments jump by several thousand dollars. In short, it meant the difference between some of these individuals being able to pay their mortgage or having their homes foreclosed upon.
The courts determined that the bank did this intentionally because they wanted to be able to foreclose on these homes. Since they couldn’t foreclose on the number of homes they wanted to through legal means, they basically jacked the mortgage rates up across the board in order to make it impossible for more of their customers to pay their mortgages.
This allowed them to then come in and essentially repossess the homes. They could then write off the original cost on their end and turn around and resell the homes, making a nice profit in the process. This case is still ongoing and the amount awarded is subject to change.
4. Improper Mortgage Lending Practices (2016) ($1.2 billion)
Obviously, their mortgage lending practices have come into question before. In 2016, they were front and center once again when they were accused of knowingly lending money to customers that they strongly suspected wouldn’t be able to repay those loans.
In short, they were accused of what amounted to predatory lending. They accomplished this by offering loans to people that should not have qualified in the first place.
Why would they choose to grant loans to people who they believed would not be able to pay them back? Again, it all comes back to the ability to foreclose on the property.
The bank would then write off the charges in order to get a tax break and then they would resell the foreclosed properties for almost as much the second time around.
The government determined that they played a major role in the housing bubble that occurred and ordered them to pay more than $1 billion to those who had been adversely affected by their predatory lending practices.
3. Overcharging Small Businesses (2017) ($2.3 billion)
As if preying on individuals who were just trying to get a loan for a place to live wasn’t enough, they also did more than their fair share of damage to small businesses.
In fact, they developed a habit of granting loans and credit cards to small businesses and then overcharging them for various phantom fees. All in all, this amounted to anywhere from several hundred to several thousand dollars being charged to each affected business.
This is another ongoing lawsuit that is still in litigation. Therefore, the amount of money that has been awarded thus far is subject to change, bearing any updates in the case. It remains to be seen what the final restitution amount will be when the case is finally settled.
2. Opening Accounts for People Without Permission (2020) ($3 billion)
The bank was also found to be opening accounts for people without their permission. In fact, the overwhelming number of people that had these types of accounts opened under their names knew absolutely nothing about it until they started receiving notices from collection agencies stating that they owed money to the bank.
It is worth noting that the individuals who were affected did not request any type of loan from the bank, nor did they request any other type of service from them.
The problem here is that people were having their credit ratings ruined in the process, through no fault of their own. The bank was literally opening these accounts with the express purpose of sending the affected individuals to collections, stating that they had received loans from the bank and then failed to pay them back.
In reality, the individuals never received any loans, nor did they apply for them. The bank merely wanted to make money from sending them to collections, in the hopes that at least some of them would assume the allegations were correct and choose to pay the amount “due” as opposed to fighting the charges.
1. Discrimination Against Blacks and Latinos (2018) ($3.8 billion)
Last but certainly not least, they were found to deny loans to Blacks and Latinos, even when they had credit scores that were far superior to those of many white people. On the rare occasion that they were not denied a loan outright, they were offered a loan at a drastically higher interest rate.
In many cases, these higher interest rates had absolutely nothing to do with their credit history. It was sadly found to be a reflection of their ethnicity and nothing else.
Apparently, this practice went on for years as they openly discriminated against people with ethnic backgrounds. Although the case has been settled, it is still not known how many additional people were affected by this practice who didn’t come forward during the initial lawsuit.
You can also read: