Wells Fargo will pay $185 million for opening accounts its customers never asked for. The Consumer Financial Protection Bureau, which announced the penalty, said the practice was “widespread” and “illegal.”
Investigators found that thousands of Wells Fargo employees set up the accounts in secret to collect bonuses for meeting sales targets. More than 2 million deposit and credit card accounts may have been created without the customer’s authorization.
Who gets the money
The largest share, $100 million, goes to the CFPB. That is the biggest fine the federal consumer watchdog has ever imposed. Another $50 million goes to the City and County of Los Angeles, and the Office of the Comptroller of the Currency takes a $35 million penalty. Wells Fargo must also make full restitution to every victim.
The BBC reported that the bank will hand back $5m to customers and must hire an independent consultant to review its practices.
“Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed,” said CFPB Director Richard Cordray. He called the action a notice to the whole industry: incentive programs that go unwatched “carry serious risks that can have serious legal consequences.”
The bank’s response
Wells Fargo, based in Sioux Falls, S.D., said it has fired managers and employees “who acted counter to our values.” It has also refunded $2.6 million in fees collected from customers. By the bank’s account, refunded accounts were a fraction of one percent of those reviewed, and the average refund came to $25.
“We regret instances where customers may have received a product that they did not request,” the bank said. It added that an independent review of its sales practices, going back to 2011, is under way. To head off a repeat, customers will now get an email confirmation soon after a deposit account is opened.
Los Angeles pressed the case
The city’s attorney, Mike Feuer, sued Wells Fargo in 2015, after a Los Angeles Times investigation into the fake accounts. His office then heard from customers and from current and former bank employees across the country: more than 1,000 phone calls and emails about the issues raised in the lawsuit.
“This is a major victory for consumers,” Feuer said. “Consumers must be able to trust their banks. They should never be taken advantage of by their banks.”
Sources
- Wells Fargo Fined $185 Million Over Creation Of Fake Accounts For Bonuses
- US bank Wells Fargo fined $185m for opening illegal accounts
Sources
- Wells Fargo Fined $185 Million Over Creation Of Fake Accounts For …
- US bank Wells Fargo fined $185m for opening illegal accounts – BBC
