U.S. financial watchdog puts employee incentives under the microscope
- Wall Street falls with financials, other post-election gainers
- The FTC Confirms Antitrust Charges Against Qualcomm (QCOM) for Monopolizing Semiconductor Device Used in Cell Phones
- United Airlines (UAL) Tops Q4 EPS by 5c
- Obama shortens sentence of Manning, who gave secrets to WikiLeaks
- After-Hours Stock Movers 01/17: (SHLO) Higher; (GIMO) (AFAM) (CSX) Lower (more...)
Get instant alerts when news breaks on your stocks. Claim your 2-week free trial to StreetInsider Premium here.
WASHINGTON (Reuters) - The U.S. Consumer Financial Protection Bureau on Monday released guidance on how companies should use incentives to get higher productivity out of workers, showing it is making good on its promise to scrutinize possibly compromising practices after the Wells Fargo scandal.
The CFPB, a consumer watchdog, and other regulators in September fined San Francisco-based Wells $185 million for creating thousands of ghost accounts. Former and current bank employees have said the bank's incentive program put extraordinary pressure on them to open accounts, while Wells Fargo executives have said rogue employees acting on their own created more than 2 million phony accounts.
After the Wells settlement was announced, CFPB Director Richard Cordray said he did not see a broader problem in the U.S. banking industry with abusive sales practices, but pledged to continue looking into the issues.
The bulletin released on Monday, which combined previous guidance in a single document, said that "risks these incentives may pose to consumers are significant and both the intended and unintended effects of incentives can be complex." It added the CFPB welcomed more dialogue and discussion about incentive programs.
Alongside opening fake accounts, employees may deceptively market products and put customers into products not in their interests in order to meet sales benchmarks or to qualify for bonuses, the CFPB said.
Since it opened its doors in 2011, the CFPB has settled 12 different cases where banks deceptively marketed add-on products to credit cards or lied to keep customers in the products, according to the bulletin.
It also has found a bank's telemarketing service provider had enrolled customers into overdraft protection services without their consent.
(Reporting by Lisa Lambert; Editing by Chizu Nomiyama)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Foreign business skeptical of China's promised opening
- Japan government may weigh revising target of no budget deficit by 2021: sources
- EU must cut costs after Brexit: Finnish finance minister
Create E-mail Alert Related CategoriesReuters
Related EntitiesWells Fargo
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!