Wells Fargo has agreed to pay $4 million as part of an agreement over claims it charged student loan borrowers illegal late fees.
It will also pay $410,000 to refund customers who paid the illegal charges, which were assessed between 2010 and 2013.
"Wells Fargo hit borrowers with illegal fees and deprived others of critical information needed to effectively manage their student loan accounts," said CFPB Director Richard Cordray."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."
The government claimed Wells Fargo charged customers a late fee if they paid on the last day of their grace period. Student loan borrowers are typically given six months after leaving school before they must start repayment. Those failing to make the payments were improperly reported to credit bureaus, according to the government.
Wells Fargo said it has changed the procedures cited in the order. The bank denies the charges but said it addressed the concerns to allow both parties to move forward.
In addition to paying the government fine, Wells Fargo must pay at least $410,000 to reimburse borrowers for wrongfully charged late fees. The bank must also correct credit reporting errors, provide additional information on how consumers can allocate their payments and use partial payments to pay what is due on as many loans as possible.
Wells Fargo currently has about 1.3 million student loan borrowers.
By: Leada Gore (Alabama Media Group).
Photo: Denver Post.
Review: Emerging Market Formulations & Research Unit, FLAGSHIP RECORDS.
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