For California customers who have consumer or small-business checking or savings accounts, credit cards or unsecured lines of credit, Wells Fargo will be sending out notices advising them that they may call the bank or visit their local branch to review their accounts or discontinue services they don’t recognize or want. As many as 1.5 million accounts were opened without customers being aware, and more than 500,000 credit cards issued. “We’re holding Wells Fargo accountable and assuring the violations we’ve alleged never happen in the future”, Feuer said. The bank was fined $185 million, including a $100 million penalty from the Consumer Financial Protection Bureau, $35 million to the office of the Comptroller of the Currency, and $50 million to the City and Country of Los Angeles. At this time the bank has already fired 5,300 employees, but as they say, the fish rots at the head. The settlements cost the company $185 million and an additional $5 million in customer remediation.
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In addition, the Sioux Falls, S.D. -based bank says it is taking steps to keep this type of scheme from occurring again, noting that it will now send a customer an email confirmation shortly after a deposit account is opened.
It all stems from Wells Fargo’s internal goal of selling at least eight financial products per customer. These accounts were opened without the customer’s knowledge and often racked up fees and other charges.
Feuer said the City filed the lawsuit a year ago after reading about the story in Los Angeles Times.
According to federal banking regulators, the practices, which dated back to 2011, reflected serious flaws in the internal culture and oversight at Wells Fargo, one of the US’ big banks.
She said many banks have turned to account fees as a primary source of revenue from consumer banking since the recession, and that the incentives to find ways to charge fees go beyond Wells Fargo.
The bank has been fined $100 million, the largest fine ever handed down by the CFPB.
And, since it is United States government policy never to send a banker to prison, they thought that engaging in criminal behavior was not such a bad idea.
If customers aren’t sure whether they were affected by having multiple accounts open in their name, or a card opened in their name without permission, they can look at their online account to see what accounts and cards are open; any accounts and cards that were open, with or without the customer’s permission, will be listed there, the spokeswoman said.
A former longtime Wells Fargo consumer bank employee in the Minneapolis region, who also spoke on the condition of anonymity, described a “cutthroat” environment that caused employees to fear for their job and make “bad ethical choices”.
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Wells Fargo said in a release that the agreements were reached “consistent with our commitment to customers and in the interest of putting this matter behind us”.
