By Ken Sweet, Associated Press
NEW YORK – 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.
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 was 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. Roughly 5,00 employees at Wells Fargo were fired in connection with the unauthorized accounts, according to 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 was transferred to these new accounts without authorization. Debit cards were issued and activated and PINs were created without customers’ knowledge. In some cases, Wells Fargo employees even created fake email addresses to sign up customers for online banking services. “Wells Fargo build 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 employees. Liz Coyle, executive director of consumer advocacy group Georgia Watch, called the scope of the allegations a “mind-boggling” level of abuse caused by employees trying to meet sales quotas. She praised regulators, including the CFPB, for cracking down. “It’s important to have an entity like the CFPB,” she said. “They’re having this kind of effect through enforcement and cleaning up the marketplace and making it safer for consumers.” Consumers should check their bank statements for any suspicious fees or added products and go to their bank branch for assistance, Coyle said.
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. 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 it had refunded $2.6 million in fees associated with accounts that were opened without authorization.
Wells Fargo is still known for having aggressive sales goals for its employees.
Staff writer J Scott Trubey contributed to this article.
SOURCE: The Atlanta Journal-Constitution