Having litigated many cases against WELLS FARGO and its attorneys pretty regularly over the past 15 years, nothing, absolutely nothing, in the recent revelations about its rampant fraud surprised me.
But, before summarizing what has been found, a larger point is necessary.
WELLS FARGO’s fraud, even as rampant and outrageous as it surely is, is the RULE not the exception in the banking and financial industry – and among corporations generally.
According to the Consumer Financial Protection Bureau (CFPB) 09/08/2016 Press Release, the CFPB fined Wells Fargo “$100 million for the widespread illegal practice of secretly opening unauthorized deposit and credit card accounts.”
“According to today’s enforcement action, thousands of Wells Fargo employees illegally enrolled consumers in these products and services without their knowledge or consent in order to obtain financial compensation for meeting sales targets.”
“Wells Fargo spurred on its salesforce with 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.”
“According to the bank’s own analysis, employees opened more than two million deposit and credit card accounts that may not have been authorized by consumers.”
“Wells Fargo will pay full restitution to all victims and a $100 million fine to the CFPB’s Civil Penalty Fund. The bank will also pay an additional $35 million penalty to the Office of the Comptroller of the Currency, and another $50 million to the City and County of Los Angeles.”
“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” said CFPB Director Richard Cordray. “Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed. Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences.”
The full text of the CFPB’s Consent Order can be found at: http://files.consumerfinance.gov/f/documents/092016_cfpb_WFBconsentorder.pdf
“Wells Fargo’s violations include:
- Opening deposit accounts and transferring funds without authorization: According to the bank’s own analysis, employees opened roughly 1.5 million deposit accounts that may not have been authorized by consumers. Employees then transferred funds from consumers’ authorized accounts to temporarily fund the new, unauthorized accounts. This widespread practice gave the employees credit for opening the new accounts, allowing them to earn additional compensation and to meet the bank’s sales goals. Consumers, in turn, were sometimes harmed because the bank charged them for insufficient funds or overdraft fees because the money was not in their original accounts.
- Applying for credit card accounts without authorization: According to the bank’s own analysis, Wells Fargo employees applied for roughly 565,000 credit card accounts that may not have been authorized by consumers. On those unauthorized credit cards, many consumers incurred annual fees, as well as associated finance or interest charges and other fees.
- Issuing and activating debit cards without authorization: Wells Fargo employees requested and issued debit cards without consumers’ knowledge or consent, going so far as to create PINs without telling consumers.
- Creating phony email addresses to enroll consumers in online-banking services: Wells Fargo employees created phony email addresses not belonging to consumers to enroll them in online-banking services without their knowledge or consent.”
You can see the entire CFPB press release by pointing your browser here: