They’re also required to pay an extra $5m to refund customers… many of whom have likely already bolted.
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In the bank’s own analysis, employees opened roughly 1.5 million deposit accounts that may not have been authorized by customers, the CFPB said.
Wells Fargo confirmed to CNNMoney that it had fired 5,300 employees over the last few years related to the shady behavior. “Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request”.
As of 2015, Wells Fargo is the second-largest banking institution in New Jersey, behind Bank of America, with an 11.57 percent deposit market share and almost 300 offices, according to the Federal Deposit Insurance Corporation.
Wells Fargo Bank has been fined $185 million in civil penalties for secretly opening millions of unauthorised deposit and credit card accounts that harmed customers, federal and state officials said yesterday.
The irregularities came to light partly from a Los Angeles County Superior Court lawsuit filed past year in which Los Angeles City attorney Mike Feuer levelled charges against the bank of violating California unfair competition laws.
Thousands of employees at Wells Fargo were involved in opening accounts and moving funds that resulted in customers getting charged fees for services they didn’t seek, according to the regulators.
“One wonders whether (the CFPB) penalty of $100 million is enough”, said David Vladeck, a Georgetown University law professor and former director of the Federal Trade Commission’s Bureau of Consumer Protection. They also applied for credit cards, issued debit cards, and enrolled customers in online banking with fake email addresses. Back in May of 2015, the Los Angeles City Attorney filed a suit claiming that Wells Fargo pressured their employees to open accounts for people that aren’t real, among other ok’ed fraudulent activity. “It sounds like a big number, but for a bank the size of Wells Fargo, it isn’t really”. Wells Fargo settled the student loan action without admitting or denying guilt, saying that it disagreed with the CFPB but settled “to put the matter behind us”.
Wells said in a statement that the bank has reserved $190 million for the fines and restitution. To meet sales goals and make money, of course. It signifies how Wells Fargo is amongst the highest capped USA banks, as it keeps a part of its strategy to sell more and keep a remediation budget in case for fall outs. The story series prompted the Los Angeles City Attorney office to sue Wells Fargo over its tactics.
Wells Fargo declined to say when it hired a consulting firm to investigate the allegations.
Even though the Wells Fargo scandal took place nationally, the settlement with L.A. requires the bank to specifically alert all its California customers to review their accounts and shut down ones they don’t recognize or want.
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Wells Fargo regularly releases numbers about how many products it sells to customers, a practice it calls “cross-sell”.
