“It sounds like a big number, but for a bank the size of Wells Fargo, it isn’t really”.
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In a complaint filed in May 2015, California prosecutors alleged that Wells Fargo pushed customers into costly financial products that they did not need or even request.
Two, Wells Fargo demanded huge numbers of signups on pain of job loss if success wasn’t achieved, and so the employees simply protected themselves as best they were able, knowing that finding new jobs these days isn’t exactly easy.
Indeed, Wells Fargo attributed the cross-selling freeze among customer-service operators to “high call volumes”, according to the internal message. The bank boasted that its customers averaged 6.15 solutions apiece, four times the national average. So customers were paying for accounts they didn’t know about.
Consumer Finance Protection Bureau is of the opinion that the main issue lies in the process which WFC has adopted for loan payments. The bank previously agreed on making false claims regarding its mortgages being insured by the Federal Housing Administration (FHA); it paid $1.2 billion in settlement for this case which was under US Department of Justice.
Tolstedt worked at Wells Fargo for 27 years, and completed her tenure as the company’s head of community banking.
Wells Fargo had to pay $185 million in fines for the scam. On top of that, a $100 million fine to the Consumer Financial Protection Bureau’s civil penalty fund. Wells Fargo employees are also accused of transferring funds authorized accounts to fund the fake ones.
“If the managers are saying, ‘We want growth; we don’t care how you get there, ‘ what do you expect those employees to do?” said Mr Dan Amiram, an associate business professor at Columbia University. But one thing is for sure: Wells Fargo can’t afford another scandal.
In 2014, Wells Fargo specifically cited “strong cross-sell ratios” as a factor behind Tolstedt’s multi-million dollar pay. “I tried to go back, but it was too much”.
Other offices or agencies, including the city and county of Los Angeles, are also taking actions, requiring Wells Fargo to pay an additional $85 million in penalties.
For its part, Wells Fargo tells Fortune that Tolstedt’s departure had nothing to do with the impending settlement and was exclusively due to her desire to move on after spending the past 27 years with the bank.
Regulators never determined the extent of Tolstedt’s knowledge about the abuse, and she was never named directly in the lawsuits brought over it.
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“They created the worst kind of culture you can create in a corporation.where they created incentives to exercise bad behavior”, Stewart Welch of the Welch Group said. The story series prompted the Los Angeles City Attorney office to sue Wells Fargo over its tactics.
