Are You Eligible for Wells Fargo’s $56.9M Class Action Lawsuit?

Wells Fargo recently reached a settlement in a class-action lawsuit related to their handling of borrowers’ credit scores during the COVID-19 pandemic. The lawsuit stemmed from actions taken by the bank when the pandemic first hit, leading them to place some borrowers into mortgage forbearance. In response to the financial impact of the pandemic, Congress passed the CARES Act in March 2020, aimed at providing relief to those affected. One of the provisions of the CARES Act required lenders to report accounts under forbearance as “current,” thus safeguarding borrowers’ credit scores.

The lawsuit alleged that Wells Fargo violated the federal Fair Credit Reporting Act by inaccurately reporting mortgage forbearances to credit bureaus. Instead of labeling the accounts as “current,” the bank allegedly identified them as “in forbearance,” potentially damaging customers’ credit scores in the process. While Wells Fargo did not admit any wrongdoing, they chose to settle the class-action lawsuit for $56.9 million.

California mortgage holders who had received a CARES Act forbearance on or after March 27, 2020, and whose accounts were reported incorrectly by Wells Fargo, qualify for the settlement. Those who meet the criteria do not need to file a claim form as they will automatically receive compensation from the settlement fund unless they choose to opt-out.

The exact payout amount remains undetermined, but class members will receive an equal share of the net settlement fund after deducting fees and expenses. Recipients will have a 90-day window to access their portion of the fund, with the possibility of additional payments if funds remain after the initial distribution. Any surplus funds will be contributed to the nonprofit organization Credit Builders Alliance.

A judge is expected to approve the settlement on April 17, paving the way for distribution to class members. The deadline for exclusion and objection is March 25, 2026, but individuals do not need to take any action to be included in the settlement. Further details can be found on the settlement website for those seeking additional information.