The government has fined Wells Fargo $185 million for issuing hundreds of thousands of credit cards to customers without their knowledge and opening more than a million bank accounts without their consent. “Employees then transferred funds from consumers’ authorized accounts to temporarily fund the new, unauthorized accounts”, wrote the CFPB.
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“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses”, CFPB Director Richard Cordray said in a statement. The City and County of Los Angeles will be paid $50 million, while the CFPB is to be paid $100 million. 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”.
The good news for consumers: Wells Fargo is in the process of paying out some $2.5 million to reimburse affected customers, and account holders don’t need to take any action to get their money.
About 5,300 employees at Wells Fargo were fired in connection with this behavior, according to Los Angeles City Attorney’s office.
Regulators are fining Wells Fargo $185 million for illegally opening millions of unauthorized accounts for their customers in order to meet aggressive sales goals. Wells Fargo had set aside $5m as the bank on the hook to pay full restitution to all victims of the scheme.
The $100 million fine from the CFPB is the largest penalty in the agency’s history.
This is an ugly moment for Wells Fargo, one of the few large American banks that have managed to produce consistent profit increases since the financial crisis. Approximately 5,300 employees have been terminated following revelations about the violations, officials said.
USA bank Wells Fargo has fired more than 5,000 of its employees and been fined a total of $185 million United States for making up millions of unauthorized bank accounts on their customers’ behalf – often without the customers’ knowledge. He warned that if financial incentive programs are not monitored carefully, they may have serious risks and lead to legal consequences.
“Consumers must be able to trust their banks”, Feuer said. In addition, 565,000 credit card accounts were in the mix without customers’ knowledge.
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Wells said in a statement that it settled “in the interest of putting this matter behind us”.
