Wells Fargo Fined $185 Million for Improper Account Openings
- Author: Anthony Vega Sep 09, 2016,
Sep 09, 2016, 4:31
He added that thousands of bank employees "misused consumer names and personal information to create new checking and credit card accounts to inflate their sales figures to meet their sales targets and claim higher bonuses".
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 behaviour, such as opening fictitious accounts.
Wells Fargo will also have to issue refunds to any customers affected, a sum which is expected to reach $2.5 million. And phony email addresses were set up to enrol customers in online services without their knowledge or consent.
In a statement, Wells Fargo said it was prepared to do what was necessary for its customers. "The actions we have taken with respect to team members and managers reflect our commitment to monitoring and addressing any inappropriate sales conduct".
The $185 million fine, $50 million of which will go to the city of Los Angeles, may seem steep, but keep in mind that Wells Fargo is a company that reported more than $80 billion in revenue and more than $22 billion in net income.
"Specifically, if a borrower made a payment that was not enough to cover the total amount due for all loans in an account, the bank divided that payment across the loans in a way that maximized late fees rather than satisfying payments for some of the loans", the watchdog said in a statement about that settlement.
Of the $190 million Wells Fargo will pay out, all but $5 million of it is in the form of penalties and fines. CFPB isn't commenting on the specifics or the timeline of the investigation, either, other than to say that Wells Fargo willingly agreed to the financial settlement with the bureau, as well as to change some of its practices to protect customers from being subjected to similar fraud in the future.
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. "If I were a Wells Fargo customer, and fortunately I am not, I'd think seriously about finding a new bank". In May 2015, the Los Angeles City Attorney filed suit, alleging the bank pressured its employees to commit fraudulent acts, including opening accounts for people that don't exist.
"We were constantly told we would end up working for McDonald's", former Wells Fargo employee Rita Murillo told the Times.
In a message to employees, Wells Fargo said "when we make mistakes, we are open about it, we take responsibility and we take action".
Wells Fargo, which did not admit wrongdoing as part of the settlement, agreed to hire an independent consultant to review its procedures.
"Wells Fargo has known about and encouraged these practices for years", the lawsuit charged. The story series prompted the city attorney to sue Wells Fargo over its tactics.
Wells Fargo also said it is now sending its customers written confirmations related to new deposit accounts and credit card applications.