In a highly politicized era, when individuals such as Bernie Sanders and Donald Trump attracted the attention of voters by appealing to the working class, the last thing the public wants to hear is reports of scandal in the halls of the country’s biggest banks. However, for Well Fargo, the message seems to have fallen on deaf ears. With the country still struggling to bring back jobs to much of the middle and working class, news that Wells Fargo authorized fake accounts without the permission of customers may strike a sour note among the public.
In a review of its accounts, Wells Fargo announced it had found 1.4 million new, fake accounts. This added to another 2.1 million fake accounts it had previously uncovered through audits of its behavior between 2009 and 2015. This fake account scandal was conducted as employees tried to meet sales goals set by the company.
Wells Fargo incentivized hitting these goals by awarding bonuses to workers, but those who weren’t able to meet their goals were often targeted and fired. The scam was conducted by employees in ways that most customers would never have been aware of.
Workers opened up dual accounts for customers that did not authorize it, or accounts for products that customers had no interest in. Sometimes, customers were also enrolled in online payment systems they did not agree to. Then, customers were hit with fees associated with these accounts. In order to address the financial losses, Wells Fargo announced it would pay back $6.1 million in refunds to customers.
While the amount of money the bank is repaying may not seem to be much when compared with the amount of money the bank handles annually, the company still may not be able to survive this scandal. CEO John Stumpf previously dodged questions by Congress when addressing previously discovered fake accounts, and the bank was already at risk with the federal government. Since then, Tim Sloan has taken over as CEO.
Despite the change in leadership, Wells Fargo is now looking at a new round of investigations. However, most dangerous to the company may be the loss of public trust that could create an exodus of customers fleeing to other banks.
[Featured Image by Justin Sullivan/Getty Images]