Wells Fargo WFC reached a settlement in the lawsuit involving Navajo Nation. The bank has agreed to pay $6.5 million to settle the case, which alleged it of "predatory and unlawful practices", per the Native American tribe. Notably, in 2017, the bank allegedly opened unauthorized accounts for some members of this Native American tribe, which they did not require.
The settlement "puts other companies on notice that harmful business practices against the Navajo people will not be tolerated," Navajo Nation President Jonathan Nez said in a statement, which referred to Wells Fargo's "long campaign of predatory and unlawful practices."
Per Wells Fargo’s statement, the agreement reflects the bank's "commitment to make things right regarding past sales practices issues."
This lawsuit reminds one of the fake-accounts scandal that the bank was involved in September 2016. The only difference this time was that the bank’s representatives fulfilled their sales targets by taking advantage of elders who do not understand English. Also, they targeted minors by opening accounts in their names and falsely reporting their ages.
In fact, the bank’s representatives have been accused of having pushed locals into opening unnecessary accounts by following them at flea markets and basketball games.
This San Francisco-based banking giant has been embroiled in a slew of scandals for more than two years now. Troubles have been mounting at Wells Fargo since the revelation of the sales scandal, which was followed by disclosure of issues in its auto-insurance business, online bill-pay services, and Wealth and Investment Management segment. With the ongoing review process of business practices, more wrongdoings may be reported, which are likely to be an overhang on the top line.
However, settlement of such issues will help the bank in regaining consumers’ confidence.
Shares of Wells Fargo have lost around 8.1% over the past six months, underperforming the industry’s decline of 6%.
Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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