Wells Fargo agreement called ‘tremendous victory’ for consumers, Navajo

Wells Fargo said it settled a lawsuit filed against it by the Navajo Nation to “make things right regarding past sales practices.” The tribe had accused the bank of predatory practices aimed at tribal members. (Photo by Mike Mozart/Creative Commons)

WASHINGTON – Consumer advocates said Friday that Wells Fargo’s $6.5 million settlement of a Navajo Nation lawsuit that charged the bank with preying on tribal members is a “tremendous victory” for Native communities targeted by such practices.

Wells Fargo & Co. said Thursday it will pay $6.5 million to the Navajo Nation to settle the tribe’s 2017 suit that alleged a history of “unfair, deceptive, fraudulent and illegal practices,” particularly aimed at elderly and illiterate tribe members.

“Our agreement with the Navajo Nation demonstrates our commitment to make things right regarding past sales practices issues as we continue the important transformation of our company,” the company said in a statement Thursday announcing the settlement.

The Navajo suit came a year after the Consumer Financial Protection Bureau accused Wells Fargo workers of secretly opening “unauthorized accounts to hit sales targets and receive bonuses,” according to court documents.

The company, which paid $1 billion in penalties, later estimated that as many as 1.5 million bank accounts and 565, 443 credit card accounts may not have been properly authorized.

Navajo officials were assured that tribal members were not affected, but later discovered that Navajo had been specifically targeted, sparking the lawsuit.

The tribe’s complaint said Wells Fargo workers were pushed to meet sales quotas, pressuring people for “unnecessary accounts” or falsely telling them they had to open savings accounts to get checks cashed, for example.

It said employees took advantage of Navajo who had difficulty understanding English, manipulated tribal members into signing documents by “accepting a thumb print in place of a signature for those who couldn’t write their names” and changed birth dates so youth could get accounts without parental consent. Bank workers often attended community events in search of customers to prey upon, the tribe said.

The lawsuit was dismissed by a U.S. District Court judge in New Mexico on technical grounds in September. But the tribe appealed, leading to this week’s settlement.

“Wells Fargo’s predatory actions defrauded and harmed the Nation,” Navajo Nation President Jonathan Nez said in a statement Thursday. “We held Wells Fargo accountable for their actions and we will continue to hold other companies accountable if their business practices do not respect our people – this puts other companies on notice that harmful business practices against the Navajo people will not be tolerated.”

And consumer advocates say the Navajo is not the only tribe affected.

Paul Bland, executive director of the nonprofit consumer advocacy group Public Justice, praised the Navajo Nation for taking action on behalf of its citizens, who could not sue on their own because of Wells Fargo’s policy of forced arbitration.

Bland said the most common predatory loan tactics are credit card issuers and payday loans, which are “more likely to have operations in Native communities” due to their “lack of availability of legitimate banking services.”

“Predatory lending thrives in the absence of competition,” Bland said Friday.

Court documents said Wells Fargo, which had five branches in the Navajo Nation, was the primary provider of banking service on the reservation, with branches in Chinle, Kayenta, Tuba City, Window Rock and Shiprock. Because Wells Fargo was the “only brick-and-mortar national bank” in the area, the documents said, it was the “only banking option for many Navajo people” who lack or have limited computer access.

The Navajo “don’t have a lot of choice” of banking institutions and were stuck with Wells Fargo, said Ed Mierzwinski of the Arizona Public Interest Research Group.

Mierzwinski said he is not sure about how other tribes may have been treated by Wells Fargo, but he called the settlement a “tremendous victory” and said he hopes for “more lawsuits in the future” by tribes to hold the bank accountable. He commended the Navajo Attorney General’s Office for “seeking justice and fighting back” with the suit.

But Bland said more needs to be done. Preventing predatory loans and other practices will require tougher regulation, since bank policies have made it impossible for consumers to act in their own defense.

Still, he said, he hopes the settlement will be “encouraging to other tribes,” calling it a “great step” for consumers who are victims of consumer and bank fraud.

Money Reporter, Washington, D.C.