Recently, Wells Fargo confirmed rumors that the company is facing a potential $1B fine from the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC). Reports revealed last year that Wells Fargo allegedly sold customers unnecessary car insurance and charged mortgage applicants with rate extension fees that the bank should have covered. According to Wells Fargo, discussions are still ongoing, and the final penalty may yet change.
This would be the first enforcement action under the CFPB's new director, Mick Mulvaney, who took over the duties in November 2017. To put this penalty in perspective, we combed through data on all the fines imposed by the CFPB since it was founded in mid 2011.
- The latest fine faced by Wells Fargo is more than twice the amount of fines levied by the CFPB in its first 12 months of operation ($485 million).
- The potential $1B penalty faced by Wells Fargo would be the largest fine and the second-largest enforcement action taken by the CFPB, behind the $2B consumer relief order handed to Ocwen Financial.
- To date, the CFPB issued $7.7 billion in enforcements. The average fine was $60.3 million.
A Closer Look at CFPB's Enforcement History
To date, the CFPB issued a total of $ 7,718,386,420 in fines to financial institutions, according to data we obtained from the Good Jobs First Violation Tracker, a national policy resource center. This is spread out across 128 total enforcements in the six years the organization has existed. Before this latest enforcement, Wells Fargo paid out $139 million —ranking it at 12th, in terms of total fines. However, should this $1 billion penalty be enforced, the bank would jump to second place, ahead of companies like Citigroup, Bank of America and JPMorgan Chase. As of today, only Ocwen Financial has faced a larger penalty. Ocwen, the country's largest nonbank mortgage loan servicer, was ordered by the CFPB in 2013 to provide $2 billion in principal reductions and $125 million in refunds to nearly 185,000 borrowers.
Keep in mind that some institutions may have faced higher fines due to their sheer size and how many consumers they impact—factors that are taken into consideration in the calculation of a fine. When company size is taken into account, Wells Fargo places near the bottom of the list for fines per $1M in assets.
|Company||Fines & Relief||Fines Per $1M In Assets|
|3||Bank of America||$747,000,000||$321|
|5||Corinthian Colleges, Inc.||$531,224,267||$1,857,038|
|8||Discover Financial Services||$232,500,000||$2,323|
|11||Capital One Financial||$165,000,000||$451|
*Data on total assets unavailable.
The CFPB has taken actions in a wide array of cases, though most fall under the umbrella of "consumer protection violations." The organization has also fined companies for student loan and mortgage abuses, banking violations and payday lending violations. The latter was the source of some controversy. Mulvaney ordered the CFPB to drop three ongoing cases against payday lenders back in March. These actions were approved by Mulvaney's predecessor, Richard Cordray, who retired in November.
|Total Fines and Relief|
|Consumer Protection Violation||$7,500,715,344|
|Payday Lending Violation||$19,000,000|
|Employment Screening Violation||$13,000,000|
|Student Loan Abuses||$4,010,000|
|Kickbacks And Bribery||$111,076|
Compared to other regulatory agencies, the CFPB is among the most active. If we examine enforcements since over the last six years, the CFPB issued 128. This takes into account offenses which primarily affect consumers, including: banking violations, student loan abuses, mortgage abuses, consumer protection violations, payday lending violations and discriminatory practices.
Which Financial Institutions Received the Most Consumer Complaints?
While fines and penalties are the last step in an enforcement action, they often begin when consumers discover and report abuses (which are later discovered to be widespread). As part of this analysis, we also examined recent complaints submitted to the Consumer Financial Protection Bureau and made available through their online database. Despite the allegations of widespread abuses, Wells Fargo still didn't come close to matching the total complaints received by Equifax—the company which famously suffered a data breach exposing the personal details of millions of Americans.
|Top 20 Most Complained About Companies||Total Complaints|
|2||Experian Information Solutions Inc.||33,825|
|3||Transunion Intermediate Holdings Inc.||33,464|
|4||Wells Fargo & Co.||16,146|
|5||Navient Solutions LLC.||14,316|
|6||Bank Of America, National Association||14,067|
|7||JPorgan Chase & Co.||13,468|
|9||Capital One Financial Corp.||9,214|
|13||American Express Co.||3,913|
|14||Ocwen Loan Servicing LLC||3,811|
|16||Portfolio Recovery Associates Inc.||3,446|
|17||Ditech Financial LLC||2,943|
|18||Alliance Data Card Services||2,839|
|20||Encore Capital Group Inc.||2,632|
We considered complaints submitted since Sept. 1, 2016. This was the last time we conducted an analysis of consumer complaints.