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Wells Fargo has agreed to pay $56.85 million to settle a class action lawsuit alleging that some customers’ credit scores were harmed during the COVID-19 pandemic.
According to legal news site Top Class Action, the bank did not admit wrongdoing, but agreed to settle a lawsuit alleging it violated the Fair Credit Reporting Act by improperly reporting mortgage forbearances.
The complaint alleges that during the early months of the pandemic, Wells Fargo issued mortgage forgiveness to some borrowers after they expressed financial hardship or potential hardship. But the lawsuit accuses Wells Fargo of inaccurately reporting account information to credit bureaus, potentially harming consumers’ credit scores, and violating the Coronavirus Aid, Relief, and Economic Security Act (CARES).
A judge in San Diego, California, is expected to decide on April 17 whether to approve the settlement, which would allow affected customers to receive payments from the settlement fund. More information about eligibility and potential compensation can be found at CaresActLitigation.com.
USA TODAY contacted Wells Fargo about the lawsuit.
Who is eligible to receive a portion of the Wells Fargo settlement?
According to the settlement website, only people who own real estate in California or have owned property with Wells Fargo mortgages can participate in the lawsuit.
To be eligible, you must have received CARES Act forbearance after March 27, 2020, according to the settlement website. Their account must have been “current” and reported by Wells Fargo to a consumer reporting agency as “pending” or something similar.
What is the CARES Act?
In March 2020, Congress enacted the CARES Act to provide financial assistance to individuals economically impacted by the pandemic.
Under the law, lenders such as Wells Fargo are required to report the most recent accounts in “forbearance” due to pandemic-related financial hardships as “current,” meaning the loan will be shown as if it were current even if the borrower requests a suspension of payments.
This law was intended to assist borrowers during this period and ensure that their credit scores were not adversely affected.
The complaint alleges that Wells Fargo violated the law by falsely reporting accounts placed on “forbearance” to credit bureaus during the pandemic.
When is the last day to apply to participate in the settlement?
Eligible consumers do not need to apply to participate in the settlement, and if the settlement is approved, payments will be made automatically from the settlement fund after the final hearing.
Consumers who are eligible but object to receiving payments can opt out of receiving payments from the payment fund, the payments website said. All objectors must file written objections to the Settlement in California Superior Court in San Diego by the March 25, 2026 objection deadline.
Those wishing to speak at the final court hearing must submit a written Notice of Intent to Appear, which must be filed by the opposition deadline and must be postmarked.
How much is the settlement amount?
Wells Fargo agreed to pay a total of $56.85 million.
The court will decide whether to approve the settlement at the final hearing on April 17th.
Julia Gomez is USA TODAY’s trends reporter, covering popular toys, scientific research, natural disasters, holidays, and trending news. Connect with her on LinkedIn ×Instagram, TikTok: @juliamariegz or email jgomez@gannett.com.
