5,300 Wells Fargo Employees Fired Over 2 Million Phony Accounts
You should be able to trust your bank, right? According to CNN Money, Wells Fargo employees attempted to meet sales goals and boost their income by creating unauthorized accounts and applying for credit cards on behalf of their customers — without their authorization:
"Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses," Richard Cordray, director of the Consumer Financial Protection Bureau, said in a statement.
[...] Wells Fargo confirmed to CNNMoney that it had fired 5,300 employees over the last few years related to the shady behavior. Employees went so far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services, the CFPB said.
The scope of the scandal is shocking. An analysis conducted by a consulting firm hired by Wells Fargo concluded that bank employees opened over 1.5 million deposit accounts that may not have been authorized.
The way it worked was that employees moved funds from customers' existing accounts into newly-created ones without their knowledge or consent, regulators say. The CFPB described this practice as "widespread." Customers were being charged for insufficient funds or overdraft fees -- because there wasn't enough money in their original accounts.
Additionally, Wells Fargo employees also submitted applications for 565,443 credit card accounts without their customers' knowledge or consent. Roughly 14,000 of those accounts incurred over $400,000 in fees, including annual fees, interest charges and overdraft-protection fees.
The CFPB said Wells Fargo will pay "full restitutions to all victims."
[Continues...]
The story goes on to report that Wells Fargo has so far fired over 5,300 employees and will pay a total of $185 million in fines in addition to restitution:
Of the total fines, $100 million will go toward the CFPB's Civil Penalty Fund, $35 million will go to the Office of the Comptroller of the Currency, and another $50 million will be paid to the City and County of Los Angeles.
"One wonders whether (the CFPB) penalty of $100 million is enough," said David Vladeck, a Georgetown University law professor and former director of the Federal Trade Commission's Bureau of Consumer Protection. "It sounds like a big number, but for a bank the size of Wells Fargo, it isn't really."
[...] "How does a bank that is supposed to have robust internal controls permit the creation of over a half-million dummy accounts?" asked Vladeck. "If I were a Wells Fargo customer, and fortunately I am not, I'd think seriously about finding a new bank."
Anyone with a Wells Fargo account should carefully check their statements to see if they were affected and are eligible for restitution.
Wells Fargo Fined $185 Million for Improper Account Openings
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 is 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.
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, as well as PINs created, without telling customers.
In some cases, Wells Fargo employees even created fake email addresses to sign up customers for online banking services.
"Wells Fargo built 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 Wells Fargo employees.
Los Angeles City Attorney Mike Feuer called Wells Fargo's behavior "outrageous" and a "major breach of trust."
"Consumers must be able to trust their banks," Feuer said.
Same story posted on a multitude of news outlets, with little difference between them.
If you do business with Wells Fraudgo, you might want to reconsider. Then again, millions of Americans still do business with the worst offenders from the 2008 economic meltdown.
Related Stories
NPR reports:
This month federal regulators fined Wells Fargo $185 million for opening checking and credit card accounts on behalf of customers who had no idea that was happening. The bank has promised to try to make restitution. [...] In some cases, Wells Fargo employees would transfer funds into the new accounts from one of the customer's existing accounts. That could result in late fees or fines for insufficient funds. Ira Rheingold, executive director of the National Association of Consumer Advocates, says that would have had a direct impact on someone's credit score. "You may not have qualified for a mortgage or you might have been dinged by getting charged a little higher interest rate because of what was reported wrongly on your credit report," he says. But the potential impact goes beyond the customer's finances. These days, credit scores are routinely checked by potential landlords, by employers — even by cellphone companies. Wu says someone who has racked up too many overdraft fees because of unauthorized accounts may have trouble getting another checking account.
The U.S. Labor Department will launch a review of complaints related to Wells Fargo:
U.S. Labor Department Secretary Thomas Perez on Monday pledged to conduct a "top-to-bottom" review of all cases, complaints and other alleged violations that the department has received concerning Wells Fargo in recent years. Perez's announcement, outlined in a Sept. 26 letter to Senator Elizabeth Warren of Massachusetts, comes after Warren and other Democrats asked the Labor Department last week to launch a probe into possible wage and working-hour law violations involving Wells Fargo tellers and sales representatives who may have stayed late to meet sales quotas.
Previously:
Wells Fargo Fined Over Unauthorized Accounts.
Wells Fargo previously admitted that employees opened around 2.1 million unauthorized bank accounts in customers' names. Now that number could rise to 3.5 million:
Nearly a year after Wells Fargo's fraudulent account scandal burst into public view, the bank said it had turned up more than a million additional accounts that customers may not have authorized.
The news set off a fresh wave of criticism from those frustrated by the bank's slow pace in coming clean about its misdeeds. "Every time we get one of these announcements, the pressure rises," said Nancy Bush, a banking industry analyst who runs NAB Research. "How many customers, and how many employees within Wells Fargo, are coming to the conclusion, 'I don't need to be associated with this'?"
The findings brought the number of potentially unauthorized accounts to 3.5 million — a nearly 70 percent increase over the bank's initial estimate.
Wells Fargo agreed last September to pay $185 million to settle three government lawsuits over the bank's creation of sham accounts. Thousands of employees, trying to meet aggressive sales goals, had created accounts in customers' names without their knowledge. Workers who met the bank's sales targets received bonuses — and those who did not risked losing their jobs. At the time, Wells Fargo said that 2.1 million suspect accounts had been opened from 2011 to mid-2015. But it also acknowledged at the time that the problems may have begun earlier, and said it would expand its review to include accounts opened from 2009 to 2016.
Also at NPR, Reuters, and Bloomberg.
Statement from Wells Fargo.
Previously: Wells Fargo Fined Over Unauthorized Accounts
Wells Fargo Likely Hurt Customers' Credit Scores; Labor Department Launches Review
(Score: 3, Insightful) by Anonymous Coward on Sunday September 11 2016, @07:33PM
"You should be able to trust your bank, right?"
Errr...what world are you living in?
(Score: 3, Insightful) by Anonymous Coward on Sunday September 11 2016, @07:35PM
It's funny because bank robbery is a federal crime subject to prison and everything, and the government will do everything in their power to go after you and protect the bank's interests. But when the bank robs you the government hardly lifts a finger.
(Score: 1) by Francis on Sunday September 11 2016, @08:33PM
I take it you forgot the bank bailout. None of the bankers went to prison and we all wound up paying them off. But we can't regulate the bankers that would destroy the economy.
Perhaps it's time we did destroy the economy. Considering how little most people benefit from the system, it probably would hurt them more than us.
(Score: 2, Touché) by Anonymous Coward on Sunday September 11 2016, @08:36PM
Too big to jail
(Score: 1, Interesting) by Anonymous Coward on Monday September 12 2016, @07:10AM
You're practically begging the question. How would regulating the bankers destroy the economy? If you start jailing the bankers responsible, they'd start behaving better and it wouldn't destroy the economy at all (same goes for misbehaving large corporations, it's time to pierce the corporate veil more regularly for such matters- look at HSBC's and Wachovia's money laundering. By the way Wachovia was bought by Wells Fargo: http://www.bloomberg.com/news/articles/2010-06-29/banks-financing-mexico-s-drug-cartels-admitted-in-wells-fargo-s-u-s-deal [bloomberg.com] ).
Some say it's too complicated to find out who is responsible but the fact if you consistently jailed people for such stuff somehow things start getting clearer in the long run. Fact is at some point someone would have done the transfer. You start with that person (jail em if necessary) and work your way up. After a while you'd find that most of the small fry won't do such stuff unless it's all in writing, in which case the Big Fish at the top would find it harder to do such stuff and get away with it. You certainly wouldn't have 5000 people doing such stuff.
As it is, what disincentive is there for the small-fry to not do this? When the authorities find out as in this case, the Bank gets fined but everyone else gets to keep their jobs, raises, bonuses, and nobody goes to jail. Whereas if they don't do it they risk losing their jobs etc.
These are 5000 thieves getting away with their crimes.
(Score: 0) by Anonymous Coward on Monday September 12 2016, @08:05AM
Indeed. I work in a different industry but a few years ago I worked in a department where the boss routinely ordered underlings to do illegal things. Any time he approached me with such a request I asked him to "remind" me via email and the email never came so I just ignored such orders and somebody else ended up doing his dirty work. While I was working there I was literally the only person willing to obey the law over my supervisor.
(Score: 0) by Anonymous Coward on Monday September 12 2016, @02:21PM
While I was working there I was literally the only person willing to obey the law over my supervisor.
Which would change once they sent people to jail for such stuff.
The jails are too full? Well stop jailing the wrong people. Why should I want the Gov to punish someone smoking or growing pot? But 5000 people transferring money from accounts without permission? WTF.
Don't anybody give me bullshit about drug crime, barons and murdered people especially when they haven't jailed a single person in HSBC or the other banks (including Wells Fargo) for laundering billions for the drug barons.
(Score: 2) by Thexalon on Sunday September 11 2016, @10:16PM
Best way to rob a bank: Be the CEO of a bank.
Here's how to do it:
1. Become a lender that is not regulated like a traditional lending business.
2. Make lots and lots of bad loans with high interest.
3. Sell the loans as securities to suckers^Hinvestors, so that you are no longer taking on any risks.
4. Take the money you made by selling the loans and use it to pay yourself millions.
Those 4 steps lead to wild profits and investors reacting accordingly.
5. When the loans don't get paid, the company goes bust, the investors lose millions, and you retire in comfort.
Let William K Black [youtube.com] explain.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 0) by Anonymous Coward on Monday September 12 2016, @02:37PM
What is the robing of a bank in comparison to the founding of one?
(Score: 2) by jmorris on Sunday September 11 2016, @07:37PM
The problem is the banks were nationalized in everything but name. No real need to worry about economics for them, the government will require you do business with them. Except it wasn't so much a takeover as a merger, and it is anyone's guess which side (or even if that term has meaning) which side is now running things. What do you think the recent agitation to abolish cash is all about?
The kaboom comes. We keep inventing ever more destructive short term fixes to postpone it, only ensuring that it will be all the worse when the bullshit finally stops working. Buckle up, it is going to get really messy when the dam breaks.
(Score: 0, Flamebait) by Anonymous Coward on Sunday September 11 2016, @07:43PM
You are so disconnected from reality.
When I read your posts all I hear anymore is the teacher from Peanuts
blah-blah-blah-bla-blah-blah
(Score: 3, Insightful) by Zz9zZ on Sunday September 11 2016, @09:29PM
I'm sure jmorris would let you know I am not on the same page as him, but this little bit had more grounding in reality than other pieces. I wouldn't say the banks are nationalized, but the corruption allowed the bail outs to happen. The risks of banking got nationalized, but pretty much everything else is a greedy festival of theft. The second paragraph is spot on, trouble has been brewing for a while and they'd better sort out this wealth disparity and wholesale theft of public tax money. If that doesn't happen, lots of us will find ourselves in the middle of some dystopian civil war. Most users here will fall into the dragnet and get hauled off or put on serious watch, which means it will be hard to exist in society.
Stupid leaders who think they're so smart... can't see the forest for the trees.
"It doesn't take a genius to see the world has problems."
"Yeah, but it takes a room fool of morons to think they're small enough for you to handle."
-Watchmen
~Tilting at windmills~
(Score: 0) by Anonymous Coward on Monday September 12 2016, @06:45AM
The guy's problem is that he thinks he's a genius with great insight, but his analysis is high-school level, or at best college freshman level. Its so pedantically reductive.
(Score: 4, Interesting) by Ethanol-fueled on Sunday September 11 2016, @07:45PM
Why not do business with a credit union, then?
Sure, when the Shit Hits The Fan™ the government is going to freeze your assets no matter which financial institution has your monies, but at least until then you can rest a lot easier. And the service is a lot better. I made the switch years ago and never looked back.
(Score: 1, Informative) by Anonymous Coward on Sunday September 11 2016, @08:34PM
If you travel a great deal, a multi-national gives a degree of peace of mind that what ever shithole I find myself in, I will have the means to extricate myself from an emergency with minimal fuss. Adoption of something like bitcoin may change this in the future, but for right now it is the easiest way to have access without a ton of planning beforehand. Maria Bamford has this bit about the sense of relief of seeing the sign of a corporation in the wild, and even though she meant it differently, it isn't far from the truth.
Also, pragmatically, large institutions really aren't going anywhere even with the entire economy going to shit. They will be bailed out at nearly any cost to maintain the power structure, and I'd rather bet my odds with the elites than the plebes.
Nationalization of the banks really isn't a bad thing per se, it's more a question of how they function. I'm a fan of the idea of public banking and public money, but you do need a government complimentary to it.
What we have now is closer to kleptocracy.
(Score: 0) by Anonymous Coward on Sunday September 11 2016, @08:53PM
Credit unions have banded together to make it a lot easier to do business with them from afar: https://co-opcreditunions.org/locator/ [co-opcreditunions.org]
I'm not sure if that is going to be much help internationally, but the concept is there.
(Score: 0) by Anonymous Coward on Monday September 12 2016, @12:37AM
You think Chase Manhattan Bank in Absurdistan is going to be at all impressed that you have a checking account with Chase Manhattan Retail Banking in Bumfuck NC?
(Score: 0) by Anonymous Coward on Monday September 12 2016, @02:32PM
If you travel a great deal, a multi-national gives a degree of peace of mind that what ever shithole I find myself in, I will have the means to extricate myself from an emergency with minimal fuss.
Sorry, I'm not a US resident, but how would your multi-national be better than a credit union? If you have web access can't you do banking transactions anywhere around the world? For payment stuff there's credit cards. Where credit cards don't work, cash works.
What magic stuff do multinationals do that credit unions don't?
Those multi-national banks are all about cutting costs, not helping you. My mom recently tried calling Citibank phone support to get her credit card activated, they made her jump through various hoops (somehow they knew her name by her phone but said her phone number is not in their system that's why she had to jump through some hoops), then they told her to create an online account and her card still isn't activated. Not much help there.
(Score: 2) by butthurt on Monday September 12 2016, @03:57PM
> [...] the government will require you do business with them.
This may already true for recipients of unemployment benefits in Michigan and North Carolina, where payments are made via Bank of America debit cards.
http://www.mlive.com/lansing-news/index.ssf/2014/05/new_michigan_unemployment_debi.html [mlive.com]
https://prepaid.bankofamerica.com/ncdesdebitcard/Program/FAQ [bankofamerica.com]
According to a Bank of America white paper,
As government agencies seek to replace costly paper checks with electronic payments, prepaid cards have proven to be a safe, reliable and cost-efficient means to disburse payments.
--https://web.archive.org/web/20131013092017/http://corp.bankofamerica.com/documents/10157/67594/Toward_a_Cashless_Society.pdf [archive.org]
(Score: 0) by Anonymous Coward on Monday September 12 2016, @08:29PM
I know in Maryland unemployment is doled out via debit cards as well.
(Score: 0) by Anonymous Coward on Sunday September 11 2016, @07:39PM
Not much of a surprise. And this industry in particular will normally just sweep its security issues under the rug and raise fees on all.
So this just affected WF customers? What about preapproved solicitations to non-customers; any faked applications there?
(Score: 4, Informative) by Anonymous Coward on Sunday September 11 2016, @08:33PM
John Stumpf, CEO $19.3 million
Timothy Sloan, COO $11 million
John Shrewsbury, CFO $9.05 million
David Carroll, SEVP $9.05 million
(all figures for 2015)
(Score: 0) by Anonymous Coward on Sunday September 11 2016, @09:32PM
So glad their expert leadership has resulted in the betterment of mankind... Why else would they get paid such large amounts???
(Score: 1, Interesting) by Anonymous Coward on Sunday September 11 2016, @09:44PM
My final mortgage payment was $0.67, yes... 67 cents. Wells Fargo would not allow the final payment to be made via automatic transfer, nor online or in person at the branch. They only accept a final mortgage payment via certified check mailed to some main office out of state. Frucking ridiculous. I went to BofA for the certified check in the amount of 67 cents, no way I was going to let Wells Fargo have that transaction.
(Score: 0) by Anonymous Coward on Monday September 12 2016, @12:40AM
So what if you paid the 67 cents with a normal check? They would send you your note back a month earlier?
(Score: 0) by Anonymous Coward on Monday September 12 2016, @02:45AM
There is a law that specifies you need to have proof of final funds for a mortgage. A friend of mine had a similar situation where he paid off his mortgage by rolling the final two payments together. They ended up sending him back a check for the difference in interest such that it left his balance at $1. He then had to send that in as a cashier's check. In reality, it is better for you to do it that way, however, as the bank is required to do origination and other refunds for you based on how early you pay off your mortgage. There should be an accounting somewhere in the payoff notice they send. In my friend's case, after sending a check for $1, they ended up sending him a check for almost $1,500 due to the refunds. A month after that, they send him a huge check in the tens of thousands for the escrow refund.
(Score: 0) by Anonymous Coward on Monday September 12 2016, @07:14AM
What if you accidentally paid them 68 cents? Can you ask for your 1 cent back in check form? ;)
(Score: 0) by Anonymous Coward on Monday September 12 2016, @01:02AM
If you lived in CA, you'd know that Wells Fargo branch offices are staffed with mindless idiots. Wells Fargo is the ITT of retail/mortgage banking.
(Score: 2) by digitalaudiorock on Monday September 12 2016, @06:44PM
Am I reading all this correctly...that 5300 emplpyees were doing this and all that happened was that they were fired?? I've yet to read about any charges being pressed. So basically if you work there you can attempt bank robbery with the only downside risk being loss of your job? I mean FFS.