WELLS FARGO FINED $185M ON PHONY ACCOUNTS, FIRES 5,300 STAFF - WHATS NEW?
California and federal regulators fined Wells Fargo a combined $185 million on Thursday, alleging the bank's employees illegally opened millions of unauthorized accounts for their customers in order to meet aggressive sales goals. A staggering 5,300 employees at Wells Fargo were fired in connection with this behavior, according to the Los Angeles City Attorney's office.
Wells Fargo fined $185 million for transferring customers’ money
into more than 2 million phony a...
Published on Sep 8, 2016
Wells Fargo employees secretly created millions of unauthorized bank and credit card accounts -- without their customers knowing it -- since 2011, federal regulators said Thursday.
"Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses," Richard Cordray, director of the Consumer Financial Protection Bureau, said in a statement.
Wells Fargo confirmed to CNNMoney that it had fired 5,300 employees related to the shady behavior over the last few years. Employees went to far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services, the CFPB said.
The scope of the scandal is shocking. An analysis conducted by a consulting firm hired by Wells Fargo concluded that bank employees opened up over 1.5 million deposit accounts that may not have been authorized, according to the CFPB.
The way it worked was that employees moved funds from customers' existing accounts into newly-created accounts without their knowledge or consent, regulators say. The CFPB described this practice as "widespread" and led to customers being charged for insufficient funds or overdraft fees -- because the money was not in their original accounts.
Additionally, Wells Fargo employees also submitted applications for 565,443 credit card accounts without their knowledge or consent, the CFPB said the analysis found. Many customers who had unauthorized credit cards opened in their names were hit by annual fees, interest charges and other fees.
The CFPB said Wells Fargo will pay "full restitutions to all victims."
Wells Fargo is being slapped with the largest penalty since the CFPB was founded in 2011. The bank agreed to pay $185 million in fines, along with $5 million to refund customers.
"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.
Wells Fargo confirmed to CNNMoney that the firings represents about 1% of its workforce.
"At Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action," the bank said in a memo to employees on Thursday.
It's not clear when Wells Fargo hired a consulting firm to investigate the allegations, nor what triggered the response. Wells Fargo did not respond to a request for comment on this.
The CFPB declined to comment on when the investigation began and what sparked it, citing agency policy. "We don't comment on how we uncover these matters," a spokesman said.
"Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses," Richard Cordray, director of the Consumer Financial Protection Bureau, said in a statement.
Wells Fargo confirmed to CNNMoney that it had fired 5,300 employees related to the shady behavior over the last few years. Employees went to far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services, the CFPB said.
The scope of the scandal is shocking. An analysis conducted by a consulting firm hired by Wells Fargo concluded that bank employees opened up over 1.5 million deposit accounts that may not have been authorized, according to the CFPB.
The way it worked was that employees moved funds from customers' existing accounts into newly-created accounts without their knowledge or consent, regulators say. The CFPB described this practice as "widespread" and led to customers being charged for insufficient funds or overdraft fees -- because the money was not in their original accounts.
Additionally, Wells Fargo employees also submitted applications for 565,443 credit card accounts without their knowledge or consent, the CFPB said the analysis found. Many customers who had unauthorized credit cards opened in their names were hit by annual fees, interest charges and other fees.
The CFPB said Wells Fargo will pay "full restitutions to all victims."
Wells Fargo is being slapped with the largest penalty since the CFPB was founded in 2011. The bank agreed to pay $185 million in fines, along with $5 million to refund customers.
"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.
Wells Fargo confirmed to CNNMoney that the firings represents about 1% of its workforce.
"At Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action," the bank said in a memo to employees on Thursday.
It's not clear when Wells Fargo hired a consulting firm to investigate the allegations, nor what triggered the response. Wells Fargo did not respond to a request for comment on this.
The CFPB declined to comment on when the investigation began and what sparked it, citing agency policy. "We don't comment on how we uncover these matters," a spokesman said.
The San Francisco-based bank will pay $100 million to the Consumer Financial Protection Bureau, a federal agency created five years ago; $35 million to the Office of the Comptroller of the Currency, and $50 million to the City and County of Los Angeles. It will also pay restitution to affected customers.
It is the largest fine the CFPB has levied against a financial institution and the largest fine in the history of the Los Angeles City Attorney's office.
The CFPB said Wells Fargo sales staff opened more than 2 million bank and credit card accounts that may have not been authorized by customers. Money in customers' accounts were transferred to these new accounts without authorization. Debit cards were issued and activated, as well as PINs created, without telling customers.
5,300 Wells Fargo Employees Fired
After Secretly Creating Millions of Phony Accounts
In some cases, Wells Fargo employees even created fake email addresses to sign up customers for online banking services.
"Wells Fargo built an incentive-compensation program that made it possible for its employees to pursue underhanded sales practices, and it appears that the bank did not monitor the program carefully," said CFPB Director Richard Cordray. The behavior was widespread, the CFPB and other regulators said, involving thousands of Wells Fargo employees.
Los Angeles City Attorney Mike Feuer called Wells Fargo's behavior "outrageous" and a "major breach of trust."
Wells Fargo's aggressive sales tactics were first disclosed by The Los Angeles Times in an investigation in 2013. The story series prompted the Los Angeles City Attorney office to sue Wells Fargo over its tactics.
In a statement, Wells Fargo said: "We regret and take responsibility for any instances where customers may have received a product that they did not request." Wells Fargo said they've refunded $2.6 million in fees associated with any product that was opened without authorization.
Despite the LA Times investigation, Wells Fargo is still known for having aggressive sales goals for its employees. Wells Fargo's executives highlight every quarter the bank's so-called "cross sale ratio," which is the number of products the bank sales to each of their individual customers. The ratio hovers around six, which means every customer of Wells Fargo has on average six different types of products with the bank.
http://www.nbcnews.com/politics/elections/minimum-wage-could-be-democrats-secret-weapon-n645066
http://www.usatoday.com/story/money/2016/09/08/wells-fargo-fined-185m-over-unauthorized-accounts/90003212/
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