Consumer Financial Protection Bureau and Wells Fargo reach settlement for violations of the Consumer Financial Protection Act (CFPA)
On April 20, 2018, the Consumer Financial Protection Bureau (CFPB) reached a settlement with Wells Fargo for violations in the CFPA. According to the CFPB, the large multinational bank administered illegal practices in issuing auto-loans and mortgages. These practices, including administering a mandatory insurance program for auto loans and charging certain mortgage borrowers interest rate-lock extensions, constituted significant violations of the Consumer Financial Protection Act, a federal statute that regulates the consumer financial market and protects consumers from neglectful creditor practices. The CFPB assessed a $1 billion penalty against Wells Fargo and ordered them to remediate harmed consumers,
This settlement is a small victory for consumers. In the case of Wells Fargo, many consumers were intentionally extorted when they were assessed fees for extending locked interest rates on mortgages. For thousands of consumers who borrowed from Wells Fargo, these fees were deemed unnecessary when Well Fargo admitted that they were responsible for the delays that made some of the extensions necessary. Settlements like these punish financial institutions for negligence and create a precedent of strict standards for consumer protections. By enforcing the CFPA, the Consumer Financial Protection Bureau regulates the financial industry and protects consumers.