Wells Fargo is adding $32 million to a previously announced consumer class-action settlement, and also extending the deal to cover phony customer accounts opened as early as 2002.
The original agreement with customers who were enrolled in accounts without their consent was announced on March 28. It
But then on April 10, a special committee of Wells Fargo’s board of directors released a 110-page report on the roots of the sales scandal. The report found a pattern of employee misconduct dating back well over a decade.
For example, it cited an internal company memo from 2004 that projected 223 employees would be fired that year for misconduct.
The $190 million settlement that Wells Fargo reached with the authorities last fall was based on findings about the bank's conduct between 2011 and 2015.
In a press release Friday, the $1.9 trillion-asset bank said that the revised settlement agreement takes into account findings from the board’s report. Under the expanded agreement, which has yet to be approved by a federal judge, $142 million would be made available to compensate customers.
Customers who were charged fees in connection with unauthorized accounts between 2009 and 2017 would be eligible for reimbursement, while those who were charged such fees between May 2002 and 2008 would receive a payment based on the average of fees paid on claims from the later period, the San Francisco-based bank said.
“The expansion of this agreement is another important step to make things right for our customers,” Wells Fargo CEO Tim Sloan said in the press release.
Attorneys for plaintiffs said that they have asked U.S. District Judge Vince Chhabria to approve the revised settlement. A court hearing has been scheduled for May 18.
“The settlement is the result of hard-fought negotiations and our refusal to accept Wells Fargo’s position that its victims had to arbitrate their claims individually with the bank,” Derek Loeser, a partner at Keller Rohrback LLP who is representing the plaintiffs, said in a press release.
It was unclear which side in the lawsuit requested that the negotiations be reopened. Wells spokesman Jim Seitz would only say that the settlement was the result of a confidential mediation process.
The expanded settlement was announced four days before Wells Fargo shareholders are scheduled to vote on whether to re-elect members of the company’s board.
Shortly after the board’s report was released, Wells Fargo Chief John Shrewsberry told American Banker that
He cited limitations with that type of analysis, which has been used to identify accounts where the possibility of fraud cannot be ruled out. Last year the company completed such a review for accounts opened in 2011 or later.
