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CFPB yesterday ordered Wells Fargo Bank to pay $410,000 in relief to student loan borrowers affected by the bank's illegal servicing practices that increased costs and unfairly penalized certain borrowers. The bureau also ordered the bank to pay a $3.6 million civil penalty over its practices.

According to CFPB's order, Wells Fargo failed to provide borrowers with the level of student loan servicing required under law. Because of Wells Fargo's practices, thousands of student loan borrowers encountered problems with their private student loans or received incorrect information about their payment options.

CFPB found that the company violated the Dodd-Frank Act's prohibitions against unfair and deceptive acts and practices, and the Fair Credit Reporting Act. Specifically, CFPB found that the bank:

• impaired consumers' ability to minimize costs and fees;
• misrepresented the value of making partial payments;
• charged illegal late fees;
• failed to update and correct information reported to credit reporting companies.

Along with the $410,000 in consumer refunds and the $3.6 million civil penalty, Wells Fargo must also improve its student loan servicing practices and its consumer billing disclosures.