Wells Fargo & Co. will guarantee that customers harmed by the bank’s practice of opening unauthorized accounts will get back fees they paid and be fully compensated for damage done to their credit scores, according to documents filed early Wednesday to settle several class-action lawsuits.
That could mean the San Francisco bank will end up shelling out substantially more than the $142 million it had previously agreed to pay to settle the lawsuits. A federal judge had said he would not approve the deal without such a guarantee, prompting Wells Fargo to accede to that and a handful of other changes the judge demanded.
The guarantee marks a second big change in the deal, and the second time Wells Fargo has agreed to significantly sweeten the settlement terms as it seeks to put the lawsuits and sham accounts scandal behind it.
In March, the bank agreed to pay $110 million to settle claims over unauthorized accounts dating back to 2009. It later boosted that number to $142 million after an internal report on the bank’s practices found that unauthorized accounts may have been created as early as 2002.
Now, the number could grow further, with the bank making an open-ended commitment to pay more than $142 million if it turns out that amount won’t be enough to cover victims’ out-of-pocket losses. The bank had resisted making such a compensation guarantee, with its attorney arguing at a hearing last month that it could result in the bank having to pay customers who never suffered losses.
Still, the exact amount Wells Fargo will have to pay is not known and likely won’t be for months, with U.S. District Judge Vince Chhabria noting at a hearing in May that the $142 million may prove to be more than enough. It’s still not clear how many customers were harmed by the bank.