Wells Fargo fined $185 mn for opening millions of unauthorised accounts
09 September 2016
Wells Fargo Bank has been fined $185 million in civil penalties for secretly opening millions of unauthorised deposit and credit card accounts that harmed customers, federal and state officials said yesterday.
Wells Fargo (WFC) employees showed higher sales by opening the accounts and transferring money from customers' authorised accounts without permission, according to the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency and Los Angeles city officials said.
According to an analysis by the San Francisco-headquartered bank, its employees opened more than 2 million deposit and credit card accounts that might not have been authorised by consumers, the officials said. Many of the transfers came with fees or other charges that were paid by customers, but the lenders employees were able to meet incentive goals.
The irregularities came to light partly from a Los Angeles County Superior Court lawsuit filed last year in which Los Angeles City attorney Mike Feuer levelled charges against the bank of violating California unfair competition laws.
The civil action charged that Wells Fargo Bank and its parent, Wells Fargo & Co, "victimized their customers by using pernicious and often illegal sales tactics to maintain high levels of sales of their banking and financial products."
According to federal banking regulators, the practices, which dated back to 2011, reflected serious flaws in the internal culture and oversight at Wells Fargo, one of the US' big banks. At least 5,300 of the employees who were involved had been fired.
According to the regulators, Wells Fargo employees opened around 1.5 million bank accounts and applied for 565,000 credit cards that might not have been authorised by customers. The bank boasts 40 million retail customers.
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 bank has agreed to refund about $2.6 million in fees that might have been inappropriately charged.