Wells Fargo Fined For Creating Millions Of Fake Accounts

By:
Chris Gaetano
Published Date:
Sep 9, 2016
Wells Fargo

The Consumer Financial Protection Bureau fined bank Wells Fargo $185 million for signing up millions of customers for deposit and credit card accounts without their knowledge or consent in order to meet sales goals, according to Bloomberg. More specifically, according to the CFPB statement, Wells Fargo was found to have: 

(1) opened unauthorized deposit accounts for existing customers and transferred
funds to those accounts from their owners’ other accounts, all without their customers’ knowledge or consent;

(2) 
submitted applications for credit cards in consumers’ names using consumers’ information without their knowledge or consent;

(3) enroll
ed consumers in online-banking services that they did not request; and

(4) ordered 
and activated debit cards using consumers’ information without their knowledge or consent. 

This practice, according to the CFPB, went on between May 2011 and July 2015, and generated over $2.4 million in fees from customers, including overdraft fees from linked accounts, monthly service fees for failing to maintain a minimum balance, annual credit card fees, and interest charges--all assessed without the customer's knowledge. Bank employees did so using email addresses not belonging to consumers to enroll them in programs without their knowledge or consent. 

The CFPB said that Wells Fargo had set sales goals and implemented incentives in order to increase the number of services that it could sell to customers. This led workers to begin signing people up for new services in order to meet these sales goals and earn financial rewards. While there is, so far, no evidence that this was a systemic practice set by bank leadership, a suit last year described an environment where managers constantly "hound, berate and threaten employees to meet these unreachable quotas. Managers often tell employees to do whatever it takes to reach their quotas." Those who did not, according to the suit, were punished or threatened with termination. 

Wells Fargo agreed to pay $100 million to the CFPB, $35 million to the Office of the Comptroller of Currency, and $50 million to the Los Angeles city attorney to settle the matter. It also agreed to compensate customers who received the fees and charges. The bank settled the charges without confirming or denying the charges levied against it. It also fired 5,300 employees associated with the improper sales practices. 

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