Wells Fargo has yet again found itself in hot water. In what is just the latest incident in a string of bad publicity, the bank has agreed to change its policies and pay more than $4 million in a settlement with the U.S. Department of Justice for allegedly violating a federal law by repossessing hundreds of cars owned by military service members.
Wells Fargo was accused of violating the Servicemembers Civil Relief Act, which was enacted to suspend certain civil obligations in order to relieve stress from military members and their families and allow them to focus on service. Under this act, Wells Fargo is barred from repossessing a service member’s car without first getting a court order. According to the DOJ, Wells Fargo violated this law hundreds of times between 2008 and 2015, illegally repossessing 413 cars.
“We all have an obligation to ensure that the women and men who serve our country in the Armed Forces are afforded all of the rights they are due. Wells Fargo failed in that obligation,” said Eileen M. Decker, U.S. attorney of the Central District of California, in a statement.
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The DOJ first launched an investigation into Wells Fargo in March 2015 after receiving a complaint from the U.S. Army’s Legal Assistance Program. The complaint stated that the bank repossessed Army National Guardsman Dennis Singleton’s car when he was preparing to ship out to Afghanistan for Operation Enduring Freedom. The car was then allegedly sold at public auction and Wells tried to collect the remaining balance of more than $10,000 from Singleton’s family.
“I commend Wells Fargo for owning up to its shortcomings and providing all the information we requested after learning of our investigation,” said Vanita Gupta, principal deputy assistant attorney general, in a statement. “This settlement should help ensure that service members are not penalized financially for protecting our nation.”
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Under the settlement, which still has to be approved by a court, Wells Fargo must pay a $60,000 civil penalty to the United States and $10,000 to each affected service member. This is in addition to fixing their credit and compensating military members for any lost equity in the car plus interest.
Wells Fargo has been under the microscope for weeks prior to this settlement over allegations that employees created millions of fake bank accounts and that management fostered an environment that encouraged unlawful practices in order to reach sales goals.
Legal reporter Hayley Fox can be reached at [email protected]. Follow Follow her on Twitter at @EPFox.
