Wells Fargo was docked $100 million over what the Consumer Financial Protection Bureau said were “widespread” practices of opening unauthorized accounts.
The bank will also pay a $35 million penalty to the Office of the Comptroller of the Currency and $50 million to the City and County of Los Angeles as well as $2.5 million in customer restitution.
Employees opened deposit and credit card accounts and shifted funds from consumers’ existing accounts into these new accounts without their knowledge or permission to do so, often racking up annual fees, overdraft-protection charges, finance charges, late fees, and other costs.
The practice involved thousands of employees and resulted in more than two million deposit and credit card accounts that may not have been authorized by consumers. Employees created fake e-mails to enroll customers in services and even PINs for unauthorized debit card activation, the bureau said.
Press accounts say the bank terminated about 5,300 employees related to the practices in question, although Wells Fargo won’t say if any managers were included. One story noted that those terminations took place over a four-year period.
Wells Fargo has dropped product sales goals for its consumer bankers in the wake of the settlement, effective Jan. 1. “We want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers,” CEO John Stumpf said in a statement.
The bank’s incentive-compensation program “made it possible for its employees to pursue underhanded sales practices, and it appears that the bank did not monitor the program carefully,” CFPB Director Richard Cordray said at the time of the settlement.
Stumpf has been called to testify before the Senate Banking Committee in a hearing Sep. 20 on Wells Fargo’s actions.
The bank said it had completed an “an extensive review” by a third-party consulting firm, prior to the settlements, which went back into 2011. The review included consumer and small business retail banking deposit accounts and unsecured credit cards opened during the period reviewed. Based on the review, Wells Fargo refunded $2.6 million of fees associated with products customers may not have requested, averaging about $25 per account, the bank said.
“Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us. 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,” the company said in a statement.