The Los Angeles City Attorney’s Office said in a statement that the workers funded the unauthorized accounts with cash from customers’ existing accounts, allegedly to “satisfy sales goals and earn financial rewards under the bank’s incentive-compensation program”. Mike Feuer, who filed a lawsuit against Wells Fargo a year ago, said, “It’s outrageous for a bank to use a customer’s private information without permission to open an unwanted account”.
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The deception came to the notice of some customers when they were charged unexpected fees, but the sham accounts mostly went unnoticed, as employees would routinely close them shortly after opening them.
The CFPB says Wells Fargo sales staff opened more than 2 million bank and credit card accounts that may have not been authorized by customers.
Wells Fargo, as part of the agreement with the CFPB said they would, from now on, send customers a confirming email within one hour of opening any deposit account and send an application acknowledgement and decision status letter after a customer submits an application for a credit card. He warned that if financial incentive programs are not monitored carefully, they may have serious risks and lead to legal consequences.
It’s also on the hook to pay full restitution to all victims of the scheme.
As of 2015, Wells Fargo is the second-largest banking institution in New Jersey, behind Bank of America, with an 11.57 percent deposit market share and almost 300 offices, according to the Federal Deposit Insurance Corporation. “Employees then transferred funds from consumers’ authorized accounts to temporarily fund the new, unauthorized accounts”, wrote the CFPB.
Moving forward, Cherin has this advice for consumers: “When you get your bank statement, take a pretty careful look at it”.
Bank employees opened 1.5 million deposit accounts, applied for 565,000 credit cards and issued an undisclosed number of debit cards, all without authorization from customers.
By market value, Wells Fargo is the largest US bank.
The CFPB also said Wells Fargo will refund money to customers affected.
The bank has fired at least 5,300 employees who were involved in these alleged practices that have been traced as far back as 2011.
Los Angeles City Attorney Mike Feuer called the bank’s behavior “outrageous” and a “major breach of trust”.
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According to the New York Times, Wells Fargo was slapped with a $185 million fine for engaging in some pretty shady practices.
