Los Angeles city and federal officials have recently accepted a $185 million settlement with Wells Fargo in regards to allegations the bank’s employees regularly opened new accounts for customers without their knowledge. The reason they did this was to hit strict sales quotas set by the bank.
On Thursday morning, the Consumer Financial Protection Board ordered the San Francisco banking giant to pay upwards of $100 million in penalties. This the largest such fine ever imposed. They must also pay $35 million to the Office of the Comptroller of the Currency as well as $50 million in penalties to local officials and in compensation to account holders for frees related to the bogus accounts.
Basically, Wells Fargo employees would open new accounts with the information from existing accounts and then transfer the funds. Account holders, then, basically had no knowledge this was happening.
“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” explains Richard Cordray, who is the director of the Consumer Financial Protection Bureau. “Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed.”
LA City Attorney Mike Feuer, in a statement on Thursday, called this settlement a victory for consumers. He said, “We’re holding Wells Fargo accountable and assuring the violations we’ve alleged never happen in the future. Consumers must be able to trust their banks.”
Wells Fargo attests that these practices are not widespread that workers who do conduct such practices in order to meet sales goals are fined or disciplined. As such, the company has set aside $5 million to cover the refunds that will be offered to customers.
In a statement, the bank said, “Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.”
Wells Fargo employees, on the other hand, have sued the bank under the charge that they forced employees to work unpaid overtime to hit certain company goals and, of course, bank customers are now suing the bank for opening the fake accounts.