The Consumer Financial Protection Bureau is levying a $1 billion fine against Wells Fargo — a record for the agency — in punishment for the banking giant's actions in its mortgage and auto loan businesses.
Announcing the penalty on Friday, the CFPB said it is part of a settlement with Wells Fargo, which has also pledged to repair the financial harm to consumers.
The new action comes less than two years after Wells Fargo was fined nearly $200 million over what the CFPB called "the widespread illegal practice of secretly opening unauthorized deposit and credit card accounts."
Those earlier penalties included a $100 million fine to the CFPB — a record at the time. The new punishment stems from the agency's findings that Wells Fargo abused its relationship with home and auto loan borrowers.
Some consumers were charged too much over mortgage interest rate-lock extensions, the CFPB said. And Wells Fargo also ran a mandatory insurance program that added insurance costs and fees into some borrowers' auto loans.
The bank maintained that auto-loan practice for more than 10 years, from October of 2005 to September of 2016, the agency said.
Lenders can require borrowers to maintain insurance on their vehicles — and there is a process that allows lenders to arrange for what's called Force-Placed Insurance, and add that cost to the loan. But Wells Fargo acknowledged that of the roughly 2 million car loans that it put into that program, it "forcibly placed duplicative or unnecessary insurance on hundreds of thousands of those borrowers' vehicles."
And for some borrowers, the bank improperly maintained those force-placed policies on their accounts even after they secured adequate insurance.
The CFPB said, "If borrowers failed to pay the amounts [Wells Fargo] charged them for the Force-Placed Insurance, they faced additional fees and, in some instances, experienced delinquency, loan default, and even repossession."