Wells Fargo has agreed to pay $3.7 billion in penalties and damages to settle allegations that it wrongfully foreclosed on properties, illegally repossessed automobiles and charged shock overdraft charges, amongst different issues.

The US Client Monetary Safety Bureau mentioned in a press release Tuesday that the financial institution’s actions had “harmed hundreds of thousands of American households” and known as the fee “an necessary preliminary step for accountability and long-term reform.”

About $2 billion will go towards compensating the greater than 16 million affected client accounts, the CFPB mentioned, including that one other $1.7 billion in penalties is earmarked for the company’s Civil Penalty Fund and will probably be put towards reduction for victims of client monetary legislation violations.

In its assertion, the CFPB mentioned it discovered that Wells Fargo:

• Had systematic failures in its servicing of auto loans and unjustly repossessed debtors’ automobiles.
• “Improperly denied hundreds of mortgage mortgage modifications,” in some instances resulting in prospects shedding their properties to unjust foreclosures.
• Unlawfully charged shock overdraft charges on ATM withdrawals and debit card transactions.
• Illegally froze client financial institution accounts, leaving these prospects unable to entry their cash for a mean of no less than two weeks.

Wells Fargo did not instantly reply to a request for remark made after regular enterprise hours Tuesday, however in a press release on its web site, CEO Charlie Scharf mentioned the financial institution has been working with regulators to systematically rectify “unacceptable practices” on the firm and remediate prospects “the place warranted.”

Scharf known as the settlement “an necessary milestone in our work to remodel the working practices at Wells Fargo and to place these points behind us” and mentioned, “We’ve got made important progress during the last three years and are a special firm right now.”

The financial institution has for years been battling issues and dealing with clashes with regulators. In 2016, a fake-account scandal made headlines, and the financial institution has misplaced two CEOs since then.

Rohit Chopra, director of the CFPB, mentioned Tuesday that “Over the previous a number of years, Wells Fargo executives have taken steps to repair longstanding issues” however that the $3.7 billion payout “shouldn’t be learn as an indication that Wells Fargo has moved previous its longstanding issues or that the CFPB’s work right here is completed.” 

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