Wells Fargo has agreed to pay $56.85 million to settle a class action lawsuit alleging that some customers’ credit scores were damaged during the COVID-19 pandemic.
The bank admitted no wrongdoing but agreed to the settlement after a lawsuit alleged it violated the Fair Credit Reporting Act by improperly reporting mortgage interest deductions, which allow borrowers to pause or reduce their payments during financial distress, according to legal news site Top Class Actions.
The lawsuit alleges that Wells Fargo imposed mortgage interest deductions on some borrowers during the early months of the pandemic after they raised financial concerns or potential hardships. The lawsuit accused Wells Fargo of violating the Coronavirus Aid, Relief, and Economic Security (CARES) Act by improperly reporting account information to credit bureaus, potentially harming consumers’ credit scores.
A judge in San Diego is expected to decide April 17 whether to approve the settlement. If approved, affected customers can receive payments from the settlement fund. More details about eligibility and potential compensation are available at CaresActLitigation.com.
USA TODAY contacted Wells Fargo about the lawsuit.
Who is eligible for a share of the Wells Fargo settlement?
According to the settlement website, only people who own or have owned real estate in California with a Wells Fargo mortgage are eligible to join the lawsuit.
To qualify, they must have received a CARES Act deferment on or after March 27, 2020, according to the settlement’s website. Their accounts must have been “current” and reported by Wells Fargo as “in forbearance” or similar to a consumer reporting agency.
What is the CARES Act?
In March 2020, Congress passed the CARES Act to provide financial assistance to people financially harmed by the pandemic.
Under the law, lenders like Wells Fargo were required to report current accounts placed into “forbearance” due to pandemic-related financial hardship as “current,” meaning the loan would appear as if it were current even if the borrower requested a payment holiday.
The law was intended to help borrowers during the pandemic and ensure their credit scores would not be hurt.
The lawsuit accuses Wells Fargo of breaking the law by misreporting accounts placed in “forbearance” during the pandemic to credit bureaus.
When is the last day to apply to participate in the settlement?
Eligible consumers do not need to apply to be included in the settlement and will receive an automatic payment from the settlement fund after the final hearing if the settlement is approved.
Consumers who qualify but object to receiving the payment can opt out of receiving a payment from the settlement fund, according to the settlement website. All opponents must file a written objection to the settlement with the Superior Court of California in San Diego on or before the objection deadline, March 25, 2026.
Those wishing to speak at the final court hearing must submit a written notice of intent to appear, which must be filed and postmarked on or before the objection deadline.
How much is the settlement worth?
In total, Wells Fargo has agreed to pay $56.85 million.
A court will decide whether to approve this settlement during the final court hearing on April 17.
Julia Gomez is a trending reporter for USA TODAY covering popular toys, science studies, natural disasters, holidays and trending news. Connect with her on LinkedIn, X, Instagram and TikTok: @juliamariegz, or email her at [email protected].
This article originally appeared on USA TODAY: Wells Fargo to pay $56.85 million settlement. Are you eligible?
Reporting by Julia Gomez, USA TODAY/USA TODAY
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