Wells Fargo pays $20M for SCRA infractions
The Office of the Comptroller of the Currency has issued a $20 million Civil Money Penalty order to Wells Fargo Bank, N.A., along with an order to make restitution to servicemembers harmed by the bank's violations of the Servicemembers Civil Relief Act (SCRA). The OCC found that between approximately 2006 and 2016, the bank violated three separate provisions of the SCRA. The bank failed to:
- provide the 6-percent interest rate limit to servicemember obligations or liabilities incurred before military service;
- accurately disclose servicemembers’ active duty status to the court via affidavits prior to evicting those servicemembers; and
- obtain court orders prior to repossessing servicemembers’ automobiles.
The OCC said that the $20 million penalty reflects "the duration and frequency of violations, the financial harm to the servicemembers, deficiencies and weaknesses in the bank’s SCRA compliance program and ineffective compliance risk management." The OCC took this action in coordination with the Department of Justice’s Civil Rights Division, which issued a separate order related to the bank’s repossession-related SCRA violations.
The Justice Department order, which has to be approved by a federal court, requires that Wells Fargo change its policies and pay over $4.1 million to resolve allegations that it violated the SCRA by repossessing 413 cars owned by protected servicemembers without obtaining the court orders required by the SCRA. The Justice Department settlement covers repossessions that occurred between Jan. 1, 2008 and July 1, 2015. The agreement requires Wells Fargo to pay $10,000 to each of the affected servicemembers, plus any lost equity in the vehicle with interest. Wells Fargo also must repair the credit of all affected servicemembers. Wells Fargo sent payments to many of the affected servicemembers in August 2016. Wells Fargo will locate additional victims and distribute payments through this settlement in the upcoming months, at no cost to the servicemembers. The agreement also requires Wells Fargo to pay a $60,000 civil penalty to the United States.