Wells Fargo will pay $4.1 million in a settlement after the financial institution was accused of defrauding members of the military, including illegally repossessing their cars.
“Wells Fargo Bank unlawfully repossessed hundreds of servicemembers’ cars without the proper process, and the bank will now rightfully pay for its violations,” said Principal Deputy Associate Attorney General Bill Baer, according to a Department of Justice press release. “The Justice Department is committed to protecting our country’s servicemembers as they continue to fight for our freedom.”
The DOJ began its investigation after it received a complaint in March 2015 from Army National Guardsman Dennis Singleton, whose car was repossessed in Hendersonville, North Carolina, as he was preparing to deploy to Afghanistan. After Wells Fargo took the car, it sold it at a public auction “and then tried to collect a deficiency balance of over $10,000 from Singleton and his family,” the DOJ said.
Singleton sought legal assistance to fight Wells Fargo, which alerted the DOJ. Its subsequent investigation found that Wells Fargo had been illegally repossessing cars for several years.
According to CNN, Wells Fargo will pay $10,000 to each of the affected servicemembers, pay the lost equity in the cars with interest, and repair their credit.
Wells Fargo was also fined $20 million by the Office of the Comptroller of the Currency for denying members of the military certain banking protections, including capping their interest rates at 6 percent.
“Auto lenders cannot repossess the cars of the brave men and women who risk their lives to defend our freedom without providing them the required legal protections under the SCRA,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.
“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,” said U.S. Attorney Eileen M. Decker of the Central District of California. “Wells Fargo failed in that obligation. The settlement announced today, however, vindicates the rights of our servicemembers and will help ensure better lending practices in the future by one of the nation's largest motor vehicle lenders.”