Wells Fargo to pay millions for securing credit card financing with homes

by Paydayloans24709 Feb 2015

Wells Fargo & Co. will send refunds to more than 1,300 New Yorkers as part of a settlement with New York State on charges of violating state law in connection with credit cards issued by a former affiliate.


Under terms of the settlement, Wells Fargo will pay a $2 million penalty and provide about $2 million in direct consumer restitution payments for violations uncovered by The Department of Financial Services' examination of the bank’s former affiliate. 


Among other issues, the regulator also found that the Wells Fargo’s affiliate secured loans made through its Nowline Visa Platinum Credit Card Account product with an interest in the borrower’s home.


“Our investigation uncovered that this Wells Fargo affiliate put borrowers’ homes on the line for routine credit card purchases – creating substantial and undue risks for consumers,” Benjamin Lawsky, superintendent of Financial Services, said. “This agreement will provide direct relief to New York consumers.”


“New Yorkers deserve to trust who they do business with – and because of this aggressive investigation, individuals and families across the state will be justly compensated,” New York Governor Andrew Cuomo added. “My administration is committed to ensuring that banks and credit card institutions are treating consumers honestly and fairly, and we will continue to do just that.”


Borrowers will also receive future interest rate reductions of 2% on their balances going forward, which is estimated to provide additional relief of approximately $300,000 total. Wells Fargo will also release any security interest or liens they hold in New York homes related to the Nowline Visa Platinum Credit Card Account. 


Should CFPB have more supervision over credit agencies?

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