Wells Fargo customers across America have a reason to be concerned today. It was announced on Thursday that, over the course of at least the last few years, Well Fargo employees had been creating fake bank accounts and credit card accounts using the names and personal information of Wells Fargo customers. The fake bank accounts were created without the knowledge or consent of the Well Fargo customers in question, reports CNN, and since 2011, over 5,300 Wells Fargo employees have been fired for creating fraudulent bank accounts.
— Wells Fargo News (@WellsFargoNews) September 8, 2016
Reportedly, the reason that the Wells Fargo employees created the fake accounts in their customer’s names was to ensure that they met their sales goals and received lucrative bonuses. They reportedly funded the phony accounts with money that they transferred from the existing accounts of customers. What’s worse, the customers in question would often lose money themselves as they were charged bank fees on accounts that they didn’t authorize and didn’t even know about.
“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses.”
So, if this behavior had been common among Wells Fargo employees for over five years, why is it just making headlines today?
According to all accounts, the reason the questionable and illegal financial manipulations of unwitting consumers is being brought to light is because the Consumer Financial Protection Bureau has gotten involved in the far-reaching scandal. Overall, roughly 2 million fake Wells Fargo accounts were created without customer knowledge or consent. And those are just the ones that were discovered by the private consulting firm that Wells Fargo hired to investigate the fraud.
Wells Fargo bank reportedly confirmed to the media that the employees responsible for the underhanded money-making scheme (designed to pad their own pay checks and bank accounts) did more than just open fake accounts using the names of their customers. Additionally, the fired Wells Fargo employees also allegedly created fake email addresses and contrived PINs to enroll their clueless customers into Wells Fargo’s online banking program.
Closed my account with @WellsFargo BYE????
— C. (@sliceeeofheaven) September 8, 2016
I know 3 people who quit at Wells Fargo because of the insane focus on selling new accounts. Setting up fake ones, though? Horrible.
— Lindsey Van Ess (@DutchOfClass) September 8, 2016
Taking my money out Wells Fargo first thing tomorrow
— AUG.20 (@Cbg_Ronald) September 8, 2016
@cnnbrk this has happened well before 2011, I found people doing this and it was swept under the rug by district managers.
— Grant Reuter (@GrantBot21) September 8, 2016
The CFPB has reported that the creation of fake deposit accounts was fairly commonplace, and in many cases, customers lost money for not just normal bank fees but they also got charged exorbitant overdraft fees when their funds were not in the appropriate account (the original one, the one they created and knew about) when the charges they actually authorized hit.
On top of the bank accounts and their associated fees, fees that customers were unwittingly charged, it has been reported that Wells Fargo employees used their customer’s names and private information to apply for over half a million credit cards. In those cases, about 14,000 known accounts accumulated at least $400,000 in various fees that were charged to the customers.
As a result of the widespread fraudulent activity that Wells Fargo has confirmed its employees engaged in since 2011, the bank has promised to reimburse all impacted customers in full. To the tune of $195 million, including fines to the CFPB.
Wells Fargo is worth more than $250 billion, and as such is the most valuable bank in the nation. The fines levied by the CFPB are the largest in the history of the organization. Of the fines that Wells Fargo has agreed to pay, only $5 million will be used as customer restitution, the rest of the money is purely punitive, with $100 million going directly to the CFPB.
“We regret and take responsibility for any instances where customers may have received a product that they did not request.”
— Business Insider (@businessinsider) September 8, 2016
Some people are questioning whether or not the punitive fine levied against Wells Fargo is enough of a punishment for the pervasive and widespread fraud that went on at the hands of bank employees, especially since the bank has admitted that the problem went on for years without being made public, and involved thousands of employees and millions of bank accounts.
“At Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action.”
Wells Fargo reportedly sent out a memo to employees Thursday, shortly before the news of the pervasive practice of fake account creation by employees was made public. It is unknown what finally prompted Wells Fargo to conduct an investigation into the dummy accounts using a private, outside firm. CFPB isn’t commenting on the specifics or the timeline of the investigation, either, other than to say that Wells Fargo willingly agreed to the financial settlement with the bureau, as well as to change some of its practices to protect customers from being subjected to similar fraud in the future.
[Image via Vividrange/Shutterstock]