The Consumer Financial Protection Bureau Levies Biggest Fine in Its History
The Consumer Financial Protection Bureau (CFPB) is a creation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed by Congress on July 21, 2010. Pub. L. No. 111-203, 124 Stat. 1376 (2010) (Dodd-Frank). Title X of Dodd-Frank, titled the Consumer Financial Protection Act of 2010 (CFP Act), established the CFPB as an independent agency under the Federal Reserve System with a mandate to protect consumers and increase transparency with respect to financial transactions. The CFP Act gives the CFPB broad powers to assume regulatory and rulemaking authority under numerous existing federal consumer protection laws, and additionally vests the Bureau with the power to enact new regulations and take enforcement and supervisory actions with respect to consumer financial products and the entities that deal in them.
The CFPB’s purpose is to “seek to implement and, where applicable, enforce federal consumer financial laws consistently for the purpose of ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive.” DoddFrank § 1021(a).
The CFPB recently made a huge splash on Thursday, September 8, 2016, with its $100 million fine against Wells Fargo for alleged widespread and unlawful practices by Wells Fargo employees who opened more than two million fake accounts in order to receive sales bonuses/financial compensation. This is the largest fine ever imposed by the CFPB. Pursuant to the CFPB press release Wells Fargo employees engaged in the following unfair, deceptive, and abusive acts and practices:
Opening deposit accounts and transferring funds without authorization: According to Wells Fargo’s own analysis, employees opened roughly 1.5 million deposit accounts that may not have been authorized by consumers. Employees then transferred funds from consumers’ authorized accounts to temporarily fund the new, unauthorized accounts. The Wells Fargo employees received credit and compensation for opening these accounts while the consumers were sometimes harmed because of insufficient funds or overdraft fees due to their money not being in their original account.
Applying for credit card accounts without authorization: According to the bank’s own analysis, Wells Fargo employees applied for roughly 565,000 credit card accounts that may not have been authorized by consumers. Many consumers were subjected to annual fees, finance charges, and other charges and fees.
Issuing and activating debit cards without authorization: Wells Fargo employees requested and issued debit cards without consumers’ knowledge or consent, going so far as to create PINs without telling consumers.
Creating phony email addresses to enroll consumers in online-banking services: Wells Fargo employees created phony email addresses not belonging to consumers to enroll them in online-banking services without their knowledge or consent.
Wells Fargo will pay full restitution to all victims and a $100 million fine to the CFPB’s Civil Penalty Fund. The bank will also pay an additional $35 million penalty to the Office of the Comptroller of the Currency, and another $50 million to the City and County of Los Angeles. Wells Fargo has indicated that it fired 5,300 employees over the last few years that were engaging in these practices.
Brendan A. Sweeney, Esq., The Florida Debt Warrior, of Sweeney Law, P.A., fights for consumer justice, one case at a time. If you have been struggling with debt or have been subjected to bank fees and/or charges that you are not familiar with then please contact Sweeney Law, P.A. to immediately to protect your rights.