NEW YORK (Reuters) - Wells Fargo & Co WFC.N has agreed to pay $4 million for violations on credit card accounts at a former affiliate, New York Governor Andrew Cuomo said.
Wells Fargo will pay a $2 million penalty and $2 million in restitution to consumers after the affiliate illegally took interests in borrowers’ homes, in exchange for extending credit for routine credit card purchases, Cuomo said in a statement.
The state’s Department of Financial Services found the violations in loans made through the bank’s NowLine Visa Platinum Credit Card Account product, the statement said.
The issues arose from the state’s examinations of accounts in 2005 and 2008, according to a consent order.
Tom Goyda, a Wells Fargo spokesman, in an email said the bank is pleased to settle, and stopped offering the NowLine product in New York in 2005.
He also said the San Francisco-based bank would release all remaining liens associated with the accounts, and has refunded or credited former NowLine customers in New York.
Wells Fargo Financial Credit Services of New York Inc (WFFCS) and Wells Fargo Financial Bank, a former South Dakota-chartered affiliate, acquired the “NowLine Home Equity Lines of Credit” that let New Yorkers make credit card purchases secured by interests in their homes.
According to the state, it is not permissible under New York law for NowLine to have secured the credit card accounts that way.
A 2008 examination also turned up evidence of altered and falsified income documents to help borrowers qualify for loans, the consent order said.
And WFFCS failed to provide discounted interest rates after charging fees for borrowers to obtain them, it added.
Additional reporting by Jonathan Stempel; Editing by Bernadette Baum, Bernard Orr
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