Wells Fargo (WFC) Fined $185M, Fires 5300 Employees After Opening More Than 2M Unauthorized Accounts
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Wells Fargo (NYSE: WFC), one of the ation's largest banks, has agreed to pay fines of $185 million and announced settlements with the Consumer Financial Protection Bureau (CFPB), the Office of the Comptroller of the Currency, and the Office of the Los Angeles City Attorney for the widespread illegal practice of secretly opening unauthorized deposit and credit card accounts. The company fired 5,300 employees related to the scheme.
The CFPB said spurred by sales targets and compensation incentives, employees boosted sales figures by covertly opening accounts and funding them by transferring funds from consumers’ authorized accounts without their knowledge or consent, often racking up fees or other charges.
According to the bank’s own analysis, employees opened more than two million deposit and credit card accounts that may not have been authorized by consumers.
Wells Fargo will pay full restitution to all victims and a $100 million fine to the CFPB’s Civil Penalty Fund. The bank will also pay an additional $35 million penalty to the Office of the Comptroller of the Currency, and another $50 million to the City and County of Los Angeles.
According to the bank’s own analysis, employees opened roughly 1.5 million deposit accounts that may not have been authorized by consumers. Employees then transferred funds from consumers’ authorized accounts to temporarily fund the new, unauthorized accounts. This widespread practice gave the employees credit for opening the new accounts, allowing them to earn additional compensation and to meet the bank’s sales goals. Consumers, in turn, were sometimes harmed because the bank charged them for insufficient funds or overdraft fees because the money was not in their original accounts.
According to the bank’s own analysis, Wells Fargo employees applied for roughly 565,000 credit card accounts that may not have been authorized by consumers. On those unauthorized credit cards, many consumers incurred annual fees, as well as associated finance or interest charges and other fees.
Wells Fargo employees requested and issued debit cards without consumers’ knowledge or consent, going so far as to create PINs without telling consumers.
Wells Fargo employees created phony email addresses not belonging to consumers to enroll them in online-banking services without their knowledge or consent.
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