The bank will also pay a $35 million fine to the Treasury Department in addition to $5 million to compensate all customers concerned.
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According to the regulators, employees created more than 2 million accounts that may not have been authorized by Wells Fargo customers, and covertly transferred funds to them from authorized accounts, racking up fees and other charges. In some cases, bank employees created fake email addresses to sign up customers for online banking services, accumulating late fees on accounts they never even knew they had.
Some 5,300 employees have been fired as a result of their role in the scheme.
On the other hand, Wells Fargo claims it “reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us”. The Consumer Financial Protection Bureau hit the bank with its biggest fine ever, $100 million. They then transferred funds from consumers’ authorized accounts to temporarily fund the new, unauthorized accounts.
There is a Wells Fargo Advisors office in Wheeling, but that division of the company is separate from its banking operations.
The Wells Fargo bank workers allegedly opened the new accounts in an effort to meet sales targets and earn bonus money. The CFPB said bank employees may have opened as many as 1.5 million checking and savings accounts, and more than 500,000 credit cards, without customers’ authorization.
“Our entire culture is centered on doing what is right for our customers”, Wells Fargo chief executive officer John Stumpf wrote in a letter to employees.
But customers were sometimes harmed because the bank charged them for insufficient funds or overdraft fees because the money was not in their original accounts. Accounts refunded represented a fraction of one percent of the accounts reviewed, and refunds averaged $25, Wells Fargo said. But the large size of the fine against Wells Fargo puts it in a class of its own.
In May 2015, following an investigation precipitated by a newspaper report, the Los Angeles city attorney’s office sued Wells Fargo over allegations of unauthorized accounts. Some 14,000 of the credit card accounts incurred $400,000 (£300,000) in fees, including annual fees, interest charges and overdraft-protection fees, regulators discovered. This may have been part of the reason why the company made a decision to hire an independent consultant to look into the situation.
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The bank did not admit any wrongdoing in the settlements, but it apologized to customers and announced steps to change its sales practices.
