Wells Fargo Fined $185 Million For Opening Fake Accounts For Customers
Wells Fargo is preparing to roll out a huge apology tour after an investigation uncovered 5,300 employees were the source of over 2 million fake accounts.
CNN Money reports a Los Angeles-based lawsuit from 2013 raised a red flag when a customer claimed they were targeted for unpaid credit cards they didn't sign up for. One by one more customers came forward, sparking an investigation by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency. Discovered between 2011 and 2015 were millions of unauthorized bank and credit card accounts. It also showed employees transferred money from customer's accounts into fake ones, issued over 500,00 unauthorized credit card accounts and created fake email addresses to set up online banking. The investigation also showed 14,000 of accounts created were exposed to $400,000 in annual fees and overdraft charges.
In a statement, Richard Cordray of the CFPB concluded that employees created the accounts in hopes of bonuses and other rewards. "Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses," the statement read. "It reflects the severity of these violations, the breadth of the unfair and abusive practices and how seriously we take them. We found this conduct to be quite surprising.”
The company didn't give a formal apology for the incident but assures the employees involved in the scam were fired. "We regret and take responsibility for any instances where customers may have received a product that they did not request," Wells Fargo said in a statement. The company will now pay a $185 fine to CFPB and $5 million in refunds to customers.
The amount is fairly small for a company worth over $200 billion, but it is the largest fine paid to the CFPB since its 2011 inception. “What happened here is Wells Fargo built an incentive-compensation program that made it possible for Wells Fargo employees to pursue underhanded sales tactics,” Cordray said. “Companies need to pay very close attention … to ensure that customers are protected.”
We bet Joanne is hunting for tips as we speak.