One of America’s biggest banks issued an apology along with a $190 million payout over a widespread fraud involving more than 5,000 bonus-chasing employees to create phony credit and checking accounts. The bank was fined $185 million for the practices on Thursday, including a record 0 million by the Consumer Financial Protection Bureau (CFPB). But that number “represents about one percent of this workforce over the five year period” when the transgressions took place, a Well Fargo spokesperson pointed out in a statement cited by UPI’s Doug C. Ware.
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It then covertly funded them with customers’ money, sometimes creating false email addresses to enroll them. Employees transferred funds from authorized accounts to temporarily fund the ones they hadn’t been given permission to open; this helped employees to meet sales goals and possibly gain more compensation. Specifically, the CFPB consent order [order, PDF] requires Wells Fargo to pay full refunds to consumers, pledge their commitment to ensure proper sales practices, comply with various documentation and employee training requirements, and pay a $100 million fine. “We regret and take responsibility for any instances where customers may have received a product that they did not request”.
The cash will go to regulators while the bank will also hand back $5m to customers. “As a result of these illegal deposit and credit card practices, many consumers were hit with annual fees, overdraft-protection charges, finance charges, late fees, and other costs”. The bank enacted compensation-incentive programs for its employees that encouraged them to sign up existing clients for other accounts, but the bank failed to adequately monitor the programs, the CFPB said.
Los Angeles City Attorney Mike Feuer reportedly described Wells Fargo’s behavior as “outrageous” and a “major breach of trust”. According to the lawsuit, the parent company and the bank “victimized their customers by using pernicious and often illegal sales tactics to maintain high levels of sales of their banking and financial products”. Money in customers’ accounts were transferred to these new accounts without authorization.
Wells Fargo (NYSE:WFC) has been fined almost $185 million for alleged illegal practices involving account openings.
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The bank, based in Sioux Falls, S.D., is a subsidiary of financial services giant Wells Fargo & Co., which is headquartered in San Francisco. The company also refunded $2.6 million to customers associated with the alleged fake accounts.
