Wells Fargo to Pay Up to $200 Million in Consumer Case

Wells Fargo will have to pay out millions of dollars in refunds after judicial approval of a settlement in the 10-year-old bounced check lawsuit against the bank and its acquisition, Crocker.

It was estimated that the settlement reached on Tuesday could cost Wells Fargo up to $200 million.

San Francisco Superior Court Judge Isabella Horton Grant signed the agreement that ends the class litigation, barring objection by the consumers opposing it.

Attorney Steve Kaus, representing some opponents, said he is considering an appeal of the settlement. All opponents of the settlement will meet to decide whether or not to appeal, he said.

If it stands, affected Wells Fargo and former Crocker customers can apply for 30% refunds on bounced check fees paid since March, 1973.

Proof Required

An assistant to the attorney who argued the lawsuit for consumers explained that under the terms of the settlement, someone who could prove $10,000 in overdraft charges would get $3,000 back. Each claimant must produce proof of bank charges.

The lawsuit originally was filed against Crocker by Berkeley lawyer Ralph Abascal. He claimed that the $6 bounced-check fee charged at the time was excessive compared to the cost for processing the checks. Wells Fargo, which acquired Crocker last year, was added as a defendant later.

On April 13, a week before the case was to go to trial, San Francisco attorney David Baum, who argued the case for the consumers, signed an agreement with Wells Fargo lawyers to settle out of court. Terms of the agreement have been on the legal burners ever since.

Abascal has fought the settlement negotiated by the other class attorneys, claiming it doesn’t go far enough to help consumers.

Besides the partial refunds, Wells Fargo agreed to contribute $1 million to a consumer education fund, freeze many bank fees until Jan. 1, 1988, and redesign its operation to limit penalties for small overdrafts.

In addition, Wells also agreed to offer credit cards with the $18 fee waived, or checks protected against overdrafts, to all current customers. That offer is to be made in October, Baum’s office said.

Abascal said few consumers would be able to file for refunds since receipts dating back to 1973 are hard to find.