Wells Fargo has set aside money to compensate customers who are part of a class-action lawsuit involving claims regarding consumer or small business bank accounts, credit cards or loans, as well as identity theft protection, between May 2002 and April of this year. It plans to begin reaching out to those affected customers soon.
Among the revisions included are a simpler opt-out process, a more comprehensive class notification procedure and an expanded anticipated scope of credit-impact damages, according to the judge’s order. Judge Vince Chhabria wrote:
“[T]he parties negotiated a revised settlement that guarantees classwide compensation for actual damages, supplements compensation for noncompensatory damages and provides a better process for claimant input and court oversight prior to final approval,” adding that he is satisfied this latest version of the settlement is “fair, reasonable and adequate.”
Judge Chhabria also rejected several intervention bids filed by several groups of Plaintiffs in related suits against the bank, saying that their concerns about such issues as discovery and the size of the settlement don’t warrant a denial of preliminary approval. The revisions to the settlement have addressed some of these objections, the judge said, while other objections either are meritless or are outweighed by the costs and risks of further litigation. Judge Chhabria wrote:
As the proposed intervenors have offered no reason to believe the ordinary objection process is an inappropriate or inconvenient means of making themselves heard through the remainder of this case, the motions to intervene are denied.
The settlement is an important component of holding Wells Fargo accountable for its abuse of its customers’ trust. Wells Fargo in March first announced that it had reached a $110 million settlement resolving 12 putative class actions alleging that bank workers opened unauthorized accounts in customers’ names or enrolled them in the bank’s services without their consent.
Those putative class actions piled up after Wells Fargo agreed to a $185 million settlement with the Consumer Financial Protection Bureau (CFPB), the Office of the Comptroller of the Currency and the Los Angeles City Attorney’s Office in September. Those agencies alleged that bank employees created more than 2 million deposit and credit card accounts without customer authorization between January 2011 and Sept. 8, 2015.
The initial proposed settlement class consisted of those claiming that Wells Fargo opened an account in their name without consent, enrolled them in a product or service or submitted an application for a product or service in their name without consent between Jan. 1, 2009, and the execution of the settlement. Wells Fargo subsequently agreed to extend the claims to 2002, adding an additional $30 million to the settlement pot on April 21.
Wells Fargo has had lots of problems – all self-inflicted – starting with the scandal that erupted in September after it reached a $185 million settlement with a Los Angeles prosecutor and the Consumer Financial Protection Bureau. Wells Fargo still faces probes from federal, state and local government agencies, including the U.S. Department of Justice, as well as a number of private lawsuits, according to its quarterly securities filing in May.
If the settlement agreement receives final approval, Wells Fargo expects it will close out the vast majority of claims in 10 class action lawsuits related to the one it is trying hard to settle.
Sources: Law360.com and Insurance Journal
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