Wells Fargo On The Hook For $24.5M Over Servicemember Abuses

Image courtesy of Mike Mozart

Wells Fargo’s bad month has just gotten worse. The U.S. Department of Justice and the Office of the Comptroller of the Currency (OCC) have fined the big bank $24.1 million for allegedly violating the law by repossessing military servicemembers’ cars.

Wells Fargo on Thursday agreed to pay $4.1 million to settle a Justice Department investigation and $20 million to settle allegations from the OCC that it repossessed vehicles from servicemembers without proper court orders.

Under the Servicemembers Civil Relief Act (SCRA) a court order is required to repossess a vehicle if the servicemember took out the loan and made a payment before entering military service.

According to the DOJ settlement [PDF], from 2008 until the middle of 2015, Wells Fargo lacked that court documentation when it repossessed 413 vehicles owned by servicemembers.

The bank’s alleged actions came to light when the DOJ received a complaint in March 2015 claiming the bank had an Army National Guardsman’s used vehicle while he was preparing to deploy to Afghanistan.

The U.S. Army’s Legal Assistance Program alleged that after Wells repossessed the vehicle it was sold at public auction, and then the bak attempted to collect a deficiency balance of over $10,000 from the servicemember.

A National Guard attorney asked Wells Fargo to produce the court order allowing the repossession, but says the bank failed to respond. The lawyer then contacted the DOJ, which opened an investigation into Wells’ practices.

That investigation found similar issues with servicemember vehicle repossession spanning at least seven years.

The DOJ settlement covers repossessions that occurred between Jan. 1, 2008 and July 1, 2015, and requires Wells Fargo to pay $10,000 to each of the affected servicemembers, plus any lost equity in the vehicle with interest.

In a separate, but related, order from the OCC, Wells Fargo will provide refunds and pay penalties totaling $20 million to resolve allegations it violated several aspects of SCRA.

The OCC claims in a consent order [PDF] that from 2006 to 2016, Wells Fargo violated three provisions of the SCRA, including failing to provide the 6% interest rate limit to servicemember obligations or liabilities incurred before military service, failing to accurately disclose servicemembers’ active duty status to the court prior to evicting those servicemembers, and failing to obtain court orders prior to repossessing servicemembers’ vehicles.

The OCC’s order also requires the bank to take corrective action to establish an enterprise-wide SCRA compliance program to detect and prevent future SCRA violations.