Wells Fargo is now accused of overcharging customers in a lawsuit that alleges the bank giant has participated in unethical behavior.
A Wells Fargo customer named Barbara Prado has filed a proposed class-action lawsuit against the bank, alleging that Wells Fargo has been overcharging thousands of its customers on their mortgage loan accounts.
According to Prado, Wells Fargo realized there was an error in the charges, but instead of being transparent about it, the bank simply sent out cashier’s checks to affected customers to try to settle the damages without explaining what had happened.
Prado claims that Wells Fargo’s representatives are unable or unwilling to tell customers how much they were overcharged or how the amounts in the cashier’s checks were determined.
She argues that the bank’s actions have been “illusory and wholly inadequate” and have left consumers facing ongoing harm and out-of-pocket losses that have not been properly reimbursed.
The lawsuit alleges that Wells Fargo is guilty of unjust enrichment and has violated California’s Unfair Competition Law.
It also claims that the bank has violated California’s penal code by receiving property that was obtained through theft and by concealing or withholding that stolen property.
Overall, the lawsuit accuses Wells Fargo of systematically overcharging its mortgage customers and then attempting to cover up the issue through opaque and inadequate remedial actions.
Separately, Wells Fargo is facing a federal investigation over issues in its anti-money laundering and sanctions programs, the bank said.
Since September 2016, WFC faced significant challenges with numerous penalties and sanctions, including a cap on the asset position by the Federal Reserve.
Earlier this month, Wells Fargo faced a class action lawsuit alleging that it mismanaged its employee health insurance plan, forcing thousands of U.S.-based employees to overpay for prescription medications.
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Also Read: The US Treasury Direct is Now Freezing Customer Accounts
Other Banking News Today
Massive US banks now prepare for millions to default according to Q2 reports, as institutions increase capital to cover insolvencies.
Big banks such as JPMorgan Chase, Bank of America and Wells Fargo are boosting their financial defenses as they prepare for customer inflow to dwindle, affecting the ability for the average American to pay their bills.
According to the latest Q2 2024 financial reports from major banks, they are significantly increasing the amount of capital they are setting aside to cover potential losses from rising credit card and loan defaults.
Collectively, these banks are allocating billions of dollars into emergency provisions and loan loss reserves to prepare for an anticipated increase in insolvencies and non-performing loans.
This reflects the banks’ growing concerns about the potential for a rise in credit card delinquencies and loan defaults in the coming months.
By bolstering their loss-absorbing capital buffers, the banks are attempting to proactively mitigate the financial risks posed by a potential surge in credit-related delinquencies and insolvencies.
This suggests the banks foresee a deterioration in consumer credit quality and are taking prudent steps to strengthen their balance sheets and resilience against such adverse credit trends.
The significant increase in these emergency loan loss provisions across the banking sector signals that the institutions are bracing for a potential economic downturn that could lead to a rise in loan defaults and credit-related write-offs.
This move underscores the banks’ efforts to position themselves to better withstand any upcoming challenges in the credit markets.
JPMorgan Chase is leading the way, increasing its provisions from $1.88 billion in the first quarter of this year to $3.05 billion – a $1.17 billion jump.
Meanwhile, Bank of America has set aside $1.5 billion, up from $1.3 billion in the previous quarter, and Wells Fargo set aside $1.24 billion, up from $938 million in the previous quarter.
The increasing balances show banks are anticipating increasing economic risk in the months ahead as commercial real estate flounders and as consumers pile up a whopping $1.02 trillion in credit card balances, according to TransUnion.
Delinquency rates across various types of debt are already on the rise, and the New York Federal Reserve says total US household debt hit $17.69 trillion in the first quarter of this year, an increase of $184 billion from the previous quarter.
The number includes mortgage balances, which rose by $190 billion to $12.44 trillion, and auto loans, which increased by $9 billion to $1.62 trillion.
Also Read: A Massive US Bank is Now Closing Credit Cards
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