USA TODAY International Edition
Wells Fargo fined $ 3.6M for student loan habits
Wells Fargo must change its practices and pay a $ 3.6 million fine for actions that federal consumer protection officials say misled student loan borrowers and resulted in some paying unnecessary fees.
In the order filed Monday leveling the penalty, the Consumer Financial Protection Bureau said the bank acted illegally, charging on- time payers with late fees, failed to inform borrowers of steps they could take to minimize fees and left credit report errors uncorrected.
“Wells Fargo hit borrowers with illegal fees and deprived others of critical information needed to effectively manage their student loan accounts,” bureau director Richard Cordray said in a statement. “Consumers should be able to rely on their servicer to process and credit payments correctly and to provide accurate and timely information.’’
According to the bureau, Wells Fargo left borrowers in the dark about how it divided single payments between multiple loans and didn’t make borrowers aware it was up to them to say how payments were to be allocated, which led to possible unnecessary late fees. Billing statements didn’t make it clear partial payment could be counted toward paying down student debt. The bank illegally tagged some borrowers with late fees though payments had been made as scheduled, and when it gave wrong information to credit reporting entities, it didn’t correct it.
Wells Fargo said in a statement it has already overhauled the problematic processes cited in the order, and while disagreeing with the charges, it will address the bureau’s concerns to put the matter behind it.