Wells Fargo’s (NYSE:WFC) $142 million national class action settlement was granted preliminary approval by a federal judge over the weekend. The settlement covers Wells Fargo customers who had fake accounts created in their names over the past 15 years. The court ruled that the settlement was “fair, reasonable and adequate.”
The national settlement is open to Wells Fargo customers who claim that the bank improperly opened checking or savings accounts, credit cards, lines of credit, or identity theft services in their names between 2002 and April 2017. Wells Fargo’s board recently released a report that found evidence of fake accounts going back to “at least” that year.
Last September, Wells Fargo admitted to opening 2 million potentially unauthorized checking and credit card accounts between 2011 and 2015. The outrage spawned federal and local investigations and forced the ouster of longtime CEO John Stumpf. Derek Loeser, a partner at the law firm Keller Rohrback and lead attorney for the plaintiffs, said in a statement that the settlement is an important step toward “holding Wells Fargo accountable for its abuse of customers’ trust.”
Wells Fargo has already repaid $3.26 million in fees to wronged customers. The bank has also paid out an additional $1.8 million to cover complaints from customers about fake accounts. Wells Fargo also offered to compensate customers whose credit scores took a hit because of the credit card accounts fraudulently opened in their names.
Part of the $142 million settlement will first go to pay for lawyer fees and administrative costs. The next part of the settlement will be allocated to Wells Fargo customers for out-of-pocket losses, such as fees from fake accounts. The rest will be split among all customers.
The amount that each customer receives will depend on how many fake accounts were opened in their name, how big a financial hit they took and how much money is left in the settlement pool. If less than $25 million is left for wronged customers after paying the lawyers, expenses, and out-of-pocket costs, Wells Fargo has agreed to put more money in the settlement fund.
Customers who believe they were victims don’t need to take action yet to be included. The bank and lawyers for the plaintiffs plan to reach out to customers in the next three months. More information is available at www.wfsettlement.com, and Wells Fargo has established a hotline at 1-877-924-8697.
Wells Fargo CEO Tim Sloan said in a statement that the court ruling was a “major milestone in our efforts to make things right for our customers.” However, victims may still have to wait before they get paid, as the settlement may not be final until early 2018. A hearing for the court to grant final approval is scheduled for January 4.