“Wells Fargo employees secretly opened unauthorised accounts to hit sales targets and receive bonuses”, says Richard Cordray, director of the CFPB.
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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.
A spokeswoman for Wells Fargo did not immediately respond to a request seeking the total number of New Jersey customers whose accounts were affected. A primary driving factor behind the violations, the CFPB says, were the bank’s compensation programs for its employees that encouraged them to sign up existing clients for deposit accounts, credit cards, debit cards, and online banking.
Retail and commercial banking giant Wells Fargo & Co will pay more than US$185 million in fines after USA regulators accused the bank of secretly opening accounts without customers’ knowledge, officials said on Thursday. Adding insult to injury, the illegal employee behavior was often unprofitable for the Wells Fargo. Wells Fargo will pay full restitution to all victims and a $100 million fine to the CFPB’s Civil Penalty Fund.
According to the Wall Street Journal, the CFPB said Wells Fargo terminated around 5,300 employees for “engaging in the improper sales practices”.
Opening new deposit accounts and transferring customer money: As many as 1.5 million accounts may have been opened in the name of customers without their knowledge or permission. As part of the agreement with regulators, Wells Fargo will compensate customers who had to pay fees or charges to their accounts.
Wells Fargo said in a statement that it regretted and took responsibility for the unauthorized accounts. It also refunded $2.6 million in fees it collected from customers.
In addition, Wells Fargo will pay $35 million to the Office of the Comptroller of the Currency and a $50 million penalty to Los Angeles city and county. It has fired 5,300 employees accused of illegally enrolling customers to meet sales quotas.
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The San Francisco-based bank will also pay US$50 million to the City of Los Angeles, which had filed suit previous year, accusing the bank of pressuring employees into fraudulent behavior, such as opening fictitious accounts.
