Wells Fargo employees reportedly created bank and credit card accounts outside of the knowledge of customers, a practice that continued since 2011.
These accounts, millions of them, were opened secretly without the customers having any knowledge.
“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” Richard Cordray, director of the Consumer Financial Protection Bureau, said.
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Wells Fargo to pay $185M in fees
As penalty, Wells Fargo is paying $185 million in fines, with an additional $5 million to refund its customers. This has been noted as the heaviest fine since the CFPB was created.
Through these fake accounts the bank was able to collect unwarranted fees. The sales figures of their employees increased, helping them earn more money. As many as 1.5 million deposit accounts that were not authorized were created.
In a statement, the bank said, “We regret and take responsibility for any instances where customers may have received a product that they did not request.”
Wells Fargo credit card fraud
As reported by CNN, the bank had sacked 5,300 employees in the last two years for this fraudulent activity. The CFPB also said employees created fake PIN numbers and email addresses to enroll their customers in online banking services. The employees transferred money and funds from customers’ accounts to the fake accounts without them knowing it; as a result, customers were paying money for insufficient funds or as overdraft fees.
The bank – backed by billionaire investor Warren Buffett who owns $100 million of Wells Fargo stock in his personal account, according to FactSet – is worth as much as $250 million, making it the most valuable bank in the country. Meanwhile, as reported by CNN, Bank of America is worth $160 billion and JPMorgan Chase is worth $243 billion.
Buffet’s firm Berkshire Hathaway is Wells Fargo’s biggest shareholder, amount to almost 10% of the stock.
Brian Kennedy, a customer of the bank, said a year ago an unauthorized account had been created at the bank under his name. The bank discontinued and closed the account when he informed them about the same. “I didn’t sign up for any bloody checking account,” Kennedy said. “They lost me as a banking customer and I have warned family and friends.”