Everyone hates bank maintenance fees. (If you don’t, email me – I have a few you’re welcome to take.) So, what would you think if you discovered that your bank had been charging you fees for an account you never opened? In fact, THEY secretly submitted an application and opened that account on your behalf. I’d imagine, you’d be furious.
So, you might be surprised to learn that Wells Fargo has fired over 5,300 employees over the past few years for this exact practice. A practice which, we’re learning, has affected a surprising number of customers. In fact, a consulting firm was hired by Wells Fargo to conduct an external investigation, and found that bank employees may have opened as many as 1.5 million deposit accounts without their customers’ permission or knowledge.
They also submitted 565,443 applications for credit card accounts without consent of the customers. These accounts racked up annual fees, interest charges, and even fees for overdraft protection. The resulting damage equates to almost half a million dollars in erroneous fees – over $400,000 from 14,000 credit card accounts alone, in fact.
Apparently, this practice has been going on since 2011, with employees fraudulently opening both these bank and credit card accounts. But why? Richard Cordray, director of the Consumer Financial Protection Bureau, says that,”Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses.” Ah, it’s starting to make sense now.
‘How could they possibly get away with something like this, though?’ you may be asking. Well, for fake bank accounts, employees were moving customers’ existing funds from authorized accounts into the new, fraudulent ones. Because of this, many customers were hit with insufficient funds or overdraft fees, as they didn’t have as much money in their bank accounts as they had deposited. Many employees were even going as far as creating fake email addresses and PIN numbers, in order to enroll the victimized customers in online banking services without their knowledge.
As expected, people are fuming. Many are asking how such a large bank, with an extensive network of internal controls, could even allow this to happen on such a large scale. Between the discovered deposit accounts and credit card applications, that equates to over 2 million victimized customers. Keep in mind that 5,300 employees have been fired over the past few years for this practice. It has obviously been a well-documented problem within the company for a while. So, why wasn’t something done years ago to prevent it from continuing?
Regardless of how it got so out of hand, Wells Fargo is in quite a bit of hot water now. They have, of course, agreed to pay “full restitution to all victims,” as well as been slammed with $185 million in fines — which is the largest penalty imposed on a company since the CFPB’s founding in 2011. On top of that, Wells Fargo will also refund $5 million to its impacted customers.
While $185 million sounds like a lot of money, some are questioning whether it’s even enough. Wells Fargo, after all, is worth over $250 billion, with Warren Buffet as the leading stakeholder in the company. These fines equate to a mere 0.074% of their worth. That’s a drop in the financial bucket, after such a grievous breach of trust and ethics.
This betrayal will surely have impacts on the company for years to come, though. When picking the financial institution that will hold your money (and often, your credit) in their hands, it’s imperative that they been deemed trustworthy. Most people wouldn’t choose a bank with a history of fraudulent activity or unauthorized use of personal information and funds. Maybe they will be able to earn back their customers’ faith in the coming years. Personally, I’ll be keeping my money and information at my existing credit union, whom I trust.
Are you a Wells Fargo customer? What are your thoughts on this being brought to light? If you’re not a WF customer, would you consider opening an account with them in the future?