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Consumer banking giant Wells Fargo agreed to pay $3.7 billion to settle charges that it harmed customers by charging illegal fees and interest on auto loans and mortgages, as well as incorrectly applying overdraft fees against savings and checking accounts.

Wells was ordered to repay $2 billion to consumers by the Consumer Financial Protection Bureau, which also enacted a $1.7 billion penalty against the San Francisco bank Tuesday. It's the largest fine ever leveled against a bank by the CFPB and the largest yet against Wells Fargo, which has spent years trying to rehabilitate its image after a series of scandals tied to its sales practices.

Regulators made it clear, however, that they believe Wells Fargo has further to go on that front.

“Put simply: Wells Fargo is a corporate recidivist that puts one out of three Americans at risk for potential harm,” said CFPB Director Rohit Chopra, in a call with reporters.

The bank's pattern of behavior has made it necessary for regulators to take additional actions against Wells Fargo that go beyond the $3.7 billion in fines and penalties, Chopra said.

The violations impacted more than 16 million customers, the bureau said. In addition to improperly charging auto loan customers with fees and interest, the bank wrongfully repossessed vehicles in some cases. The bank also improperly denied thousands of mortgage loan modifications for homeowners.

Wells Fargo has been sanctioned repeatedly by U.S. regulators for violations of consumer protection laws going back to 2016, when employees were found to have opened millions of accounts illegally in order to meet unrealistic sales goals. Since then, executives have repeatedly said Wells is cleaning up its act, only for the bank to be found in violation of other parts of consumer protection law, including in its auto and mortgage lending businesses.

Wells paid a $1 billion penalty in 2018 for widespread consumer law violations, the largest against a bank for such violations at the time.

The bank had signaled to its investors that it anticipated additional fines and penalties from regulators and aside $2 billion in the third quarter for that reason.

Wells remains under a Federal Reserve order forbidding the bank from growing any larger until the Fed deems that its problems are resolved. That order, originally enacted in 2018, was expected to last only a year or two.

CEO Charles Scharf said in a prepared statement Tuesday that the agreement with the CFPB is part of an effort to "transform operating practices at Wells Fargo and to put these issues behind us.”

While Wells Fargo tried to frame the agreement with the CFPB as a resolution of established bad behavior, CFPB officials said some of the violations cited in Tuesday's order took place this year.

“This should not been seen as Wells Fargo has moved past its problems,” Chopra said.

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The banking giant agreed to settle charges that it harmed customers by charging illegal fees and interest, as well as incorrectly applying overdraft fees. It's the largest fine ever leveled against a bank by the CFPB and the largest yet against Wells Fargo.

Wells Fargo to pay $3.7B over consumer law violations

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