Essentially, Wells Fargo employees secretly created millions of unauthorized bank and credit card accounts – without their customers knowing it – since 2011.
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The US’ biggest bank Wells Fargo has been fined $185m for illegally opening accounts to boost sales targets.The US’ biggest bank Wells Fargo has been fined $185m for illegally opening accounts to boost sales targets.
They would then move some money from customers’ existing accounts into the fraudulent ones, which sometimes led to customers getting hit with overdraft fees, interest charges and late fees.
Meanwhile, employees applied for about 565,000 credit card accounts that may not have been authorised by customers, some of which incurred annual fees.
Wells Fargo has been ordered to pay full restitution to all victims, which is estimated to total $2.5 million.
In recent financial filings, Wells Fargo has changed how it describes and calculates “cross-sell” – a term for bundling multiple products to retail, wealth management and corporate customers. The remaining $5 million will refund all wronged customers.
It is the largest fine the CFPB has levied against a financial institution, and it is the largest fine in the history of the Los Angeles City Attorney’s Office. In the wake of the scandal, the bank which is one of the biggest in the USA, has fired 5,300 employees.
The Consumer Financial Protection Bureau (CFPB) handed out its largest penalty ever to the company, a cool $100 million, which makes up a large portion of the $185 million fine.
Moving forward, Cherin has this advice for consumers: “When you get your bank statement, take a pretty careful look at it”.
Wells Fargo’s aggressive sales tactics were first disclosed by the Los Angeles Times in an investigation in 2013.
Wells will refund consumers monthly maintenance fees, nonsufficient fund fees, overdraft charges, and other fees they paid because of the creation of the unauthorized accounts, the CFPB said.
Los Angeles City Attorney Mike Feuer reportedly described Wells Fargo’s behavior as “outrageous” and a “major breach of trust”. Employees even created fake passwords and email addresses to enrol customers in online banking services for which they had not registered, said regulators.
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CFPB Director Richard Cordray blamed Wells Fargo’s company culture for allowing the “reckless, unsafe or unsound practices”.
