Wells Fargo ordered to pay $203 million for misleading customers

[JURIST] A federal judge on Tuesday reinstated a $203 million penalty against Wells Fargo [corporate website] in a class action suit alleging that the bank affirmatively misled customers and then charged excessive overdraft fees. Rather than processing purchases in a chronological order, as is the common practice, the bank processed its customers' purchases from largest to smallest. The penalty was originally ordered in August 2010, but the US Court of Appeals for the Ninth Circuit [official website] tossed [text, PDF] the order in December. The case's original judge, Judge William Alsup, reviewed the case and reinstated the penalty after concluding once again that the bank misled its customers about the posting order of charges, and then proceeded to charge the customers for overdraft fees. Wells Fargo plans to appeal the decision.

Wells Fargo [JURIST news archive] has been involved in many legal battles recently. The US government filed a lawsuit against the bank in October, alleging that Wells Fargo deliberately concealed [JURIST report] the nature of mortgages that were insured by the federal government, ultimately costing the government hundreds of millions of dollars in insurance claims. In August the company was assessed a $6.5 million fine [JURIST report] by the Securities and Exchange Commission (SEC) for improperly selling high-risk mortgage securities to investors during the housing market crash in 200. In July the Ninth Circuit dismissed a lawsuit against several banks, including Wells Fargo, that accused the banks of price-fixing [JURIST report]. In March the SEC filed a subpoena enforcement action[JURIST report] against Wells Fargo to force the company to hand over documents connected to the company's sale of nearly $60 billion in residential mortgage-backed securities to investors.

 

About Paper Chase

Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

© Copyright JURIST Legal News and Research Services, Inc., 2013.