At this time the bank has already fired 5,300 employees, but as they say, the fish rots at the head.
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“It is outrageous for a bank to use a customer’s private information without permission to open an unwanted account”, L.A. City Attorney Michael Feuer said.
Regulators said the bank’s employees had been motivated to open the unauthorized accounts by compensation policies that rewarded them for drumming up new business.
The bank will pay $5 million in customer remediation, and as a result of a third-party review, the bank claims to have refunded customers $2.6 million for unwarranted fees.
The $100 million fine from the CFPB is the largest penalty in the agency’s history. Regulators have fined the San Francisco-based bank $185 million.
Of the $190 million Wells Fargo will pay out, all but $5 million of it is in the form of penalties and fines.
Cordray’s agency said that Wells Fargo had been ordered to refund all fees and surcharges associated with the unauthorized accounts, and estimated the total amount due to customers at a minimum of $2.5 million.
Other aspects of the scam included creating PINs for customers that they didn’t want or ask for, and creating fake email addresses so employees could enroll people in new accounts without tipping them off. Affected members will also get full restitution.
“Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed”, bureau director Richard Cordray said in a statement. In the past, the bureau has taken actions involving credit card “add-on” products where customers were signed up for additional features without their knowledge or consent, as in the Citibank case. Berkshire Hathaway, the investment firm run by legendary investor Warren Buffett, is the company’s biggest shareholder. Mike Feuer as well as investigations by two federal regulators: the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency.
Wells Fargo agreed to hire an independent consultant to oversee its procedures.
“At Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action”.
“Consumers must be able to trust their banks”.
The settlements put to rest a lawsuit filed previous year by Los Angeles City Atty.
The crux of the allegation: spurred by sales targets and compensation incentives, employees boosted sales figures by covertly opening accounts and funding them by transferring funds from consumers’ authorized accounts without their knowledge or consent, often racking up fees or other charges.
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Getting hit with an overdraft fee because you chose to splurge on a dinner out and forgot to check your meager bank account before signing the check can already feel like a slap in the face. “If I were a Wells Fargo customer, and fortunately I am not, I’d think seriously about finding a new bank”.
