[U]nscrupulous banking practices, deceptive educational policies and pollution-control cheating have led to $2.9 million in legal settlements for Vermont and additional cash for consumers.
Attorney General TJ Donovan announced Thursday agreements with Wells Fargo Bank, Fiat Chrysler, Bosch and Career Education Corp.
The settlements arose from Vermont participating in national, multistate legal actions. Direct payments to Vermont will go into the state’s general fund, but there also are opportunities for residents to benefit in the form of debt relief, restitution and vehicle maintenance.
“We’re standing up and fighting for Vermonters when Vermonters get ripped off,” Donovan said at a Statehouse news conference.
The largest payment comes from Wells Fargo. The San Francisco-based bank is sending $1.98 million to Vermont as part of a national, $575 million settlement for improper financial dealings from 2005 onward.
Wells Fargo engaged in “a wide variety of unfair and deceptive acts and practices,” said Vermont Assistant Attorney General James Layman.
In the Wells Fargo settlement, prosecutors from all 50 states alleged that the company’s policies “created an incentive for employees to engage in improper sales practices to satisfy sales goals and earn financial rewards.”
Those practices included opening accounts, transferring funds, issuing debit cards, performing online-banking enrollments and applying for insurance “without customers’ knowledge or consent,” the document says.
Layman said Wells Fargo’s misdeeds also included “charging auto purchasers for unnecessary insurance products, failure to provide refunds for certain auto-financing products and incorrectly charging mortgage customers fees to extend their rate locks.” Rate locks guarantee consumers a fixed interest rate while their mortgage application is pending.
Such practices have resulted in a big price tag for Wells Fargo. Documents say the company “has committed to or already provided remediation to consumers in amounts in excess of $600 million,” and the bank will create a website where customers can ensure they’ve received all compensation for which they’re eligible.
In an announcement of the multistate settlement, Wells Fargo’s chief executive officer said the deal “underscores our serious commitment to making things right in regard to past issues as we work to build a better bank.”
After Wells Fargo, Vermont’s next-largest settlement is a combined $906,978 from Fiat Chrysler and Bosch.
Fiat Chrysler is paying $362,428 “to resolve allegations that it violated both our environmental protection laws and our consumer laws by selling pickup trucks and SUVs that contained defeat devices,” said Assistant Attorney General Nick Persampieri.
Those devices, Persampieri said, “caused the vehicles to emit higher emissions of nitrogen oxide while they were in use on the roads than they emitted while they were undergoing emission testing.”
The state also says the automaker violated Vermont consumer laws “by advertising the vehicles as being environmentally friendly, when in fact they were emitting excess emissions.”
At issue are “EcoDiesel” engines in 2014-2016 Dodge Ram 1500 pickup trucks and Jeep Grand Cherokees. There were 253 of these vehicles sold to Vermonters, and Fiat Chrysler will make a “consumer restitution package” available to owners or lessees of those vehicles, Assistant Attorney General Merideth Chaudoir said.
That package includes restitution ranging from $990 to $3,075 per vehicle. The deal also includes dealer-performed repairs to negate the defeat devices.
“This is important because, in order to receive the restitution payment, consumers are going to have to participate in the fix,” Chaudoir said. She added that “the fix is not expected to materially change the performance of the vehicles in any way.”
Consumers can’t receive a restitution package just yet. Officials said Fiat Chrysler won’t begin reviewing and processing claims until the settlement receives final court approval, which is supposed to happen at the end of April or beginning of May.
In addition to Fiat Chrysler’s settlement, Bosch will pay $544,550 to Vermont for its role in the emissions scandal. Persampieri said Bosch supplied engine-control units with software used to defeat devices in vehicles made by Fiat Chrysler and Volkswagen, which has previously settled its own cases with Vermont.
The other settlement announced Thursday is with Illinois-based Career Education Corp., which is paying $50,000 to Vermont.
The company, which officials said offers mostly online courses, is denying any wrongdoing. But it has settled legal disputes with attorneys general in 48 states who claimed Career Education Corp. “placed significant pressure on its employees to enroll students and engaged in unfair and deceptive practices.”
Those practices included “misrepresentations about quality of education, employment prospects and costs of student loans,” the attorney general’s office said.
Under the settlement, Layman said Career Education Corp. “will be required to adhere to strict standards that will ensure that students receive clear and correct disclosures about the educational opportunities available to them, and the costs and consequences of them.”
The company also has agreed to forgo collection of more than $490 million in student debt, including $270,000 owed by 129 Vermont students, officials said.
