One Unanswered Case Led to Wells, DOJ Settlement

LAS VEGAS — The Wells Fargo & Co.’s settlement with the Department of Justice — announced Sept. 30 — stemmed from one unanswered inquiry.

The DOJ launched its investigation after it received a complaint in March 2015 from the U.S. Army’s Legal Assistance Program alleging that Wells Fargo — doing business as Wells Fargo Dealer Services — had repossessed Army National Guardsman Dennis Singleton’s used car in Hendersonville, N.C., while he was preparing to deploy to Afghanistan to fight in Operation Enduring Freedom.

When Singleton returned from war, he went to a military legal services attorney to get his financial standing in order, and that attorney informed him that his Servicemembers Civil Relief Act (SCRA) rights may have been violated in the repossession of his car, said Jon Seward, deputy chief in the Housing & Civil Enforcement Section of the Civil Rights Division at the Department of Justice.

“Here is what people should pay close attention to: At that point in time, the legal services attorney reached out to Wells to see if the matter could be resolved, and never got a response,” Steward said at the 2016 Auto Finance Summit yesterday. “So there was an opportunity to fix this one problem, but there was no response.”

Subsequently, the DOJ opened an investigation after it was contacted by the legal services attorney.

“So now, instead of one problem to fix, the company was faced with our investigation,” Seward said. “We asked for data from 2008 to 2015 and identified 413 affected service members whose vehicles were repossessed illegally.”

Wells was “incredibly cooperative” with the investigation and took proactive steps to improve compliance measures, even before an investigation was opened, he added.

However, rather than “fix a single problem, the company ended up with 413 servicesmembers [with rights violated], $4.1 million dollars and a public consent order later — that’s the problem that they had to fix,” Seward told attendees. “So I encourage anyone in this business to be responsive when you have a small problem that can be fixed.”

Wells was also fined $20 million by the Office of the Comptroller of the Currency for violating the same act in late September.

“We self-identified many of the problems over the past year, and we have strengthened our processes to deliver SCRA benefits and protections more proactively and consistently, enhanced our efforts to identify eligible servicemembers and improved our oversight,” Wells said in the statement at the time. “The changes we’ve already made and the ongoing commitment of the entire organization, including our board of directors, to delivering for our military customers demonstrate the great honor we have to serve those who serve our country.”