Supervisors Consider Using $25M Wells Fargo Settlement to Investigate Other Consumer Protection Violations
Los Angeles County officials are considering how to spend $25 million in legal penalties levied on Wells Fargo, with some proposing Tuesday, Nov. 22 that a new litigation division be set up to target violators of consumer protection laws.
The bank is set to pay $50 million in civil penalties to resolve litigation involving bank accounts set up without customers’ permission. The money, to be split between the county and city of Los Angeles, is in addition to at least $135 million in penalties paid to two federal agencies over similar allegations.
The payments settle a lawsuit brought by City Attorney Mike Feuer, filed after the Los Angeles Times reported that fake accounts were created without customers’ knowledge and caused them to rack up bank fees.
Supervisors Hilda Solis and Mark Ridley-Thomas pointed to Feuer’s success as potential justification for setting up a unit of county attorneys targeting those who routinely ignore consumer protections.
By law, the funds must be used by either the District Attorney or County Counsel. However, the money could be spent on a wide range of efforts, including enforcing minimum wage violations, battling fraudulent immigration consultants, expanding legal assistance centers, identifying theft among foster youth or establishing a Center for Financial Empowerment, according to the
The Los Angeles City Council recently budgeted roughly $5.8 million to fund Feuer’s consumer protection division.
Wells Fargo officials have said the agreements were made with its customers in mind and out of a desire to show accountability.
“Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request,” the company said in a statement issued in September when the settlement was announced.
“Our entire culture is centered on doing what is right for our customers. However, at Wells Fargo, when we make mistakes, we are open about it, we take responsibility and we take action. Today’s agreements are consistent with these beliefs.”
The Consumer Financial Protection Bureau, one of the federal agencies that also reached a settlement with Wells Fargo, alleged that the bank opened hundreds of thousands of deposit and tens of thousands of credit card accounts without their customers’ knowledge or permission.
The fake accounts were set up by bank employees to achieve sales goals and reap financial incentive rewards, and the bank fired about 5,300 employees as the result of the allegations, according to the CFPB.
The Board of Supervisors asked for a report back in 60 days.