Wells Fargo has been ordered to pay full restitution to all victims, which is estimated to total $2.5 million.
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On Thursday, federal regulators said Wells Fargo employees secretly created millions of unauthorized bank and credit card accounts – without their customers knowing it – since 2011.
“When I worked at Wells Fargo, I faced the threat of being fired if I didn’t meet their unreasonable sales quotes every day, and it’s high time that Wells Fargo pays for preying on consumers’ financial livelihoods”, Khalid Taha, a former employee, said in a statement.
The scope of the scandal is shocking. 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. The accounts were opened for deposits and credit cards and were intended by its employees to boost sales.
Wells Fargo Bank, a subsidiary of Wells Fargo & Co., reached agreements with the U.S. Consumer Financial Protection Bureau and other agencies to pay the fines.
Wells Fargo has fired 5,300 employees and incurred $185 million in fines for a massive pattern of fraud that saw millions of accounts opened on behalf of customers without their knowledge.
Feuer called the bank’s behavior “outrageous” but said it was unclear how many customers in the Los Angeles area were affected by the alleged abuse.
They would then move some money from customers’ existing accounts into the fraudulent ones, which sometimes led to customers getting hit with overdraft fees, interest charges and late fees. Wells Fargo’s executives highlight every quarter the bank’s so-called “cross sale ratio”, which is the number of products the bank sales to each of their individual customers. “This extraordinary resolution sends a strong message – to big banks and consumers alike – that we’ll be vigilant in protecting consumer rights”.
In a statement, the bureau said that while compensation programs like the one described here are common and accepted, Wells Fargo “failed to monitor the implementation of these programs with adequate care”.
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Cherin said with current banking regulations in place, incidents like this are few and far between. It sounds like these customers never even received these products, but surely, this massive fine will prevent the practice from happening again in the future.
