Bank Reaches Settlement Over Pandemic Reporting
Wells Fargo has agreed to pay $56.85 million to resolve a class-action lawsuit alleging that some customers’ credit scores were negatively impacted during the COVID-19 pandemic due to how the bank reported certain mortgage accounts.
The bank denied any wrongdoing but chose to settle after plaintiffs claimed it violated the Fair Credit Reporting Act by improperly handling the reporting of mortgage forbearances. The allegations center on the early months of the pandemic, when borrowers facing financial hardship sought payment relief.
According to court filings, some customers were placed into forbearance after communicating hardship or anticipated hardship. The lawsuit argues that Wells Fargo failed to comply with provisions of the Coronavirus Aid, Relief, and Economic Security Act, commonly known as the CARES Act, by inaccurately reporting account statuses to credit bureaus.
Alleged Impact on Credit Scores
The CARES Act, passed in March 2020, required lenders to report accounts in pandemic-related forbearance as “current” if they had been up to date at the time relief was granted. This safeguard was intended to prevent borrowers from suffering credit damage while temporarily pausing or reducing payments.
The lawsuit claims Wells Fargo instead reported some of these accounts in ways that may have signaled delinquency or otherwise harmed consumers’ credit profiles.
Who May Qualify
Eligibility is limited to individuals who currently own or previously owned property in California and had a Wells Fargo mortgage. To qualify, borrowers must have received a CARES Act forbearance on or after March 27, 2020.
Additionally, their accounts must have been current at the time and subsequently reported as being in forbearance or a similar designation to a consumer reporting agency.
Key Deadlines and Court Review
A judge in San Diego, California, is scheduled to hold a final approval hearing on April 17. If the settlement is approved, eligible consumers will automatically receive payments from the settlement fund without needing to submit a claim.
Those who wish to object must file a written objection with the Superior Court of California in San Diego by March 25, 2026. Individuals intending to speak at the final hearing must also submit a written notice of intent to appear by the same deadline.
Settlement Amount
The total settlement fund amounts to $56.85 million. The court will determine whether the agreement is fair and should receive final approval at the April hearing.