Tuesday, May 19, 2026
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Ninth Circuit Restores Putative Class Action Against Wells Fargo Over Alleged ‘Scandal’
Majority Says Claim That Bank Opens Up Accounts Without Named Depositors’ Consent Is Adequately Pled
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday reinstated a putative class action against Wells Fargo and others alleging that the bank engages in unlawful conduct by opening accounts for persons without their knowledge and collects credit information concerning them.
In 2020, Wells Fargo entered into an agreement with the U.S. Attorney’s Office for the Central District of California and other government agencies to pay $3 billion to resolve potential civil and criminal liability based on similar allegations.
The plaintiffs seek actual damages, statutory damages, punitive damages, declaratory relief, injunctive relief, and costs and attorney fees.
Also sued was the Sacramento-based Early Warning, a specialty credit reporting agency that collects and publishes information about consumers’ and businesses’ bank accounts. It is “a business that Wells Fargo and the nation’s six other largest banks collectively established and continue to collectively own and operate,” according to the second amended complaint.
Other owners of Early Warning are Bank of America, Capital One, JPMorgan Chase, PNC Bank, Truist, and U.S. Bank.
Circuit Judge Morgan Christen and Senior Circuit Judge Sidney Thomas signed yesterday’s memorandum opinion restoring claims under the federal the Fair Credit Reporting Act (“FCTA”) and California’s Consumer Credit Reporting Agencies Act. The action had been dismissed by District Court Judge Trina L. Thompson of the Northern District of California for failure to state a claim.
Circuit Judge Danielle J. Forrest partially dissented.
Allegations of Complaint
The pleading sets forth:
“Just as one Wells Fargo fake account scandal concludes, another emerges. This time, Defendants are engaging in and/or enabling a practice known as synthetic identity fraud, which is where fraudsters (with Defendants’ witting or unwitting assistance) use a combination of fake and real personal identification information (‘PII’) to open unauthorized accounts in their consumer victims’ names. Wells Fargo knows better than to open these accounts in the victims’ names because, before opening the accounts. Wells Fargo obtains its victims’ true and correct PII from a third-party identity verification service, LexisNexis Risk Solutions FL Inc…., which is incompatible with the information associated with the synthetic identity fraud accounts. With these unauthorized accounts thus opened. Wells Fargo secretly processes unauthorized electronic fund transfer transactions in victims’ names using these unauthorized accounts (money laundering), and, with assistance from Early Warning. Wells Fargo also fraudulently obtains its victims’ credit reports and the valuable true and correct personal identification and personal financial information…therein.
“Wells Fargo and Early Warning also corrupt the consumers’ Early Warning credit files with the fraudulent and derogatory unauthorized transaction information and false PII which Wells Fargo furnishes to Early Warning with respect to the synthetic identity fraud accounts.”
Majority’s View
Christen and Thomas declared that the allegations—“accepted as true and construed in the light most favorable to Plaintiffs”—state a plausible claim, adding:
“Plaintiffs’ allegations support an inference that Wells Fargo’s violation of FCRA was willful….Here, the operative complaint supports the inference that Wells Fargo willfully violated FCRA by obtaining Plaintiffs’ credit reports despite knowing that it had no colorable basis for doing so.
“Wells Fargo insists, and the district court purported to find, that its actions demonstrate it reasonably believed that Plaintiffs were its existing customers. But even if the operative complaint compelled this inference, that alone would not establish a permissible purpose….The operative complaint does not suggest that Plaintiffs initiated any transaction with Wells Fargo, even if Wells Fargo believed they were its legitimate customers.”
Negligence Alleged
Although the pleading alleges that “Wells Fargo willfully accessed portions or all of Plaintiffs’ consumer credit reports under false pretenses or knowingly without a permissible purpose,” it also sets forth “[i]n the alternative only, Wells Fargo negligently” did so. The memorandum opinion says that a claim of negligence is not stayed because “allegations of actual damages are too conclusory.”
Forrest wrote:
“I disagree with the majority’s conclusion that the district court erred in dismissing Plaintiff s claim that Wells Fargo willfully violated the Fair Credit Reporting Act because Plaintiffs allegations do not ‘tend to exclude the possibility’ that Wells Fargo’s challenged conduct was unintentional.”
The case is Patterson v. Wells Fargo & Co., 24-7439.
Wells Fargo in February agreed to a $56.85 million settlement of an unrelated class action under the FCRA based on allegedly reporting mortgage accounts as being “in forbearance” when they were actually current.
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