ShareThis Page
Business Headlines

Wells Fargo fined $185M for illegally opening accounts for customers to meet quotas

| Thursday, Sept. 8, 2016, 9:51 p.m.
In this July 14, 2014, file photo, a man passes by a Wells Fargo bank office in Oakland, Calif.
In this July 14, 2014, file photo, a man passes by a Wells Fargo bank office in Oakland, Calif.
In this Jan. 2, 2015, file photo, a sign advertises hiring opportunities at a Jimmy John's sandwich shop, as an employee walks out to make a delivery in Atlanta. Sandwich chain Jimmy John's Sandwiches says it sold a majority stake in the company to private equity firm Roark Capital Group. Financial terms of the deal were not disclosed.
In this Jan. 2, 2015, file photo, a sign advertises hiring opportunities at a Jimmy John's sandwich shop, as an employee walks out to make a delivery in Atlanta. Sandwich chain Jimmy John's Sandwiches says it sold a majority stake in the company to private equity firm Roark Capital Group. Financial terms of the deal were not disclosed.

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 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.

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's office to sue Wells Fargo over its tactics.

Roughly 5,300 employees at Wells Fargo were fired in connection with the behavior, according to Los Angeles City Attorney's office.

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 has refunded $2.6 million in fees associated with products that were opened without authorization.

Despite the L.A. Times investigation, Wells Fargo is still known for having aggressive sales goals for its employees. Wells Fargo's executives highlight every quarter the bank's so-called “cross sale ratio,” which is the number of products the bank sells to each of their individual customers. The ratio hovers around six, which means every customer of Wells Fargo has on average six different types of products with the bank.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.

click me