Wells Fargo will pay $100 million to the CFPB, the largest fine to date imposed by the bureau, which was created in the wake of the 2008 financial crisis. 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”.
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A consulting firm hired by Wells Fargo found that employees opened almost 1.5 million unauthorized deposit accounts and submitted applications for 565,443 credit card accounts.
Pay full refunds to consumers, including the sum of all monthly maintenance fees, nonsufficient fund fees, overdraft charges, and other fees they paid because of the creation of the unauthorized accounts.
Of the $190 million Wells Fargo will pay out, all but $5 million of it is in the form of penalties and fines.
The California-based bank will pay $100 million U.S. to the Consumer Financial Protection Bureau (CFPB), $35 million United States to the Office of the Comptroller of the Currency and $50 million USA to the City and County of Los Angeles along with restitution to customers for a scam dating back to 2011 that allowed the bank to rack up millions in bank fees and meet aggressive growth targets. “I think this is unique to Wells Fargo and their particular situation and how hard they push on cross-sell”, he said. They also created fake email accounts and PIN numbers to sign customers up for new accounts, most of which were unnoticed or closed shortly after opening.
A Wells Fargo spokeswoman said about 5,000 managers and employees were fired for their actions, representing about 1 percent of the 100,000 people who worked in their branches over the five-year period involved.
Workers were motivated to open the unauthorised accounts by compensation policies that rewarded them for new business in a competitive atmosphere inadequately supervised by administrators.
“Unchecked incentives can lead to serious consumer harm, and that is what happened here”, said Richard Cordray, director of the Consumer Financial Protection Bureau. An additional $35 million goes to the Office of the Comptroller of the Currency, while the city and county of Los Angeles gets $50 million. “However, at Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action”, the bank said.
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The bank also said that $2.6 million has been refunded to customers for any fees associated with products they may not have requested.
