Wells Fargo Bank fined $185M, fires 5,300 staffers over fake account scam
John Stumpf, chairman and CEO of Wells Fargo & Company
Wells Fargo Bank was fined a total of $185 million as punishment for a five-year long scam that saw bank employees using bank customer information to illegally create accounts and email addresses and apply for credit and debit cards all in order to meet assigned sales goals and earn commissions.
About 5,300 workers were fired over the incident, according to CNNMoney.
Acting in most cases without any authority from the account holders, Wells Fargo workers opened an estimated 1.5 million deposit accounts and applied for roughly 565,000 credit card accounts, according to the Consumer Financial Protection Bureau (CFPB). Once the accounts were opened the employees transferred money to temporarily fund the new accounts which allowed them to meet sales goals and earn extra compensation.
In order to make the fake accounts appear legitimate the workers created fake email addresses and enrolled the accounts in various online banking programs. Debit cards and PINs were also issued in the customer's name.
“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,” the CFPB wrote.
In many cases bank customers were charged fines for insufficient funds and overdraft fees on accounts that they did not know existed in their names. The unauthorized credit cards also cost customers through finance and interest charges.
“Our entire culture is centered on doing what is right for our customers. However, at Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action. Today's agreements are consistent with these beliefs,” John Stumpf, chairman and CEO of Wells Fargo & Company, said in a letter to employees.
The $185 million in fines will go to three entities: $100 million to the CFPB, $35 million to the office of the Comptroller of the Currency, and $50 million to the City and County of Los Angeles. Wells Fargo will set aside an additional $5 million to refund customers. The $100 million fine is the largest the CFPB has ever levied.