The Consumer Financial Protection Bureau (CFPB) imposed a $4 million penalty against Wells Fargo & Co. for what it termed “illegal student loan servicing practices” that it said increased costs and unfairly penalized certain borrowers.
Among the accusations made in the order were that the bank impaired customers’ ability to minimize costs and fees, misrepresented the value of making partial payments, charged illegal late fees and failed to update and correct inaccurate information reported to credit reporting companies.
The order requires Wells Fargo to improve its consumer billing and student loan payment processing practices, provide $410,000 in relief to borrowers and pay a $3.6 million civil penalty to the CFPB.
“Wells Fargo hit borrowers with illegal fees and deprived others of critical information needed to effectively manage their student loan accounts,” CFPB 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 and we will continue our work to improve the student loan servicing market.”
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