Lawsuit Settled by Investors Over Fake Wells Fargo Accounts
Wells Fargo has settled a class action suit against the bank involving more allegations of fraudulent activity. This one stems from the revelation that bank employees opened up fake accounts or accounts for consumers, which were not authorized by account holders.
Scandal Involving Unauthorized Accounts
The scandal, first revealed in 2013, involved Wells Fargo’s aggressive and unreasonable sales goals put on employees to open customer accounts. It’s estimated that 2 million unwanted accounts (bank accounts and credit card accounts) were opened by the bank in the name of unsuspecting consumers, often using the personal and private information the bank had on customers from other accounts or bank products.
In some cases, bank employees even transferred money from customers’ real, authorized accounts into the fraudulent, unauthorized accounts bank employees had created. Pins for credit and debit cards were created, and fake email addresses were used to “sign up” unsuspecting consumers for accounts they didn’t want, authorize, or even know existed.
In some cases, Wells Fargo would link the unwanted credit card to a checking account. When an overdraft fee was incurred on the checking account, it automatically was put on the credit card. Because the consumer often didn’t even know they had taken out a credit card, the fees were often not paid, leading to damaged credit and interest.
Wells Fargo subsequently dedicated a fund to repay consumers for charges on these accounts, but was were ordered to pay $185 million.
The government sued Wells Fargo, citing the unrealistic sales goals, its incentive program, and lack of oversight as the motivation behind the salespeople’s unethical behavior. It did not say that Wells Fargo knew of or encouraged the fraudulent behavior directly.
Shareholder Suit Settles
This more recent class action was brought by Wells Fargo’s shareholders, who alleged that Wells Fargo bragged about its ability to cross sell products to consumers, including the opening of accounts and usage of bank services, much of which was, in reality, fraudulent.
The investors’ lawsuit alleged that the bank continued to do this to inflate the appeal of its stock, to the detriment of its own reputation, and ethics, and knowing that it was artificially inflating figures.
Anybody with Wells Fargo stock between early 2014 and late 2016 may be eligible for part of the settlement funds.
And all this was after Wells Fargo was ordered to pay $1 billion by government regulators, after it assessed improper fees to some mortgages, and improper insurance policies onto some car loans.
The Federal Reserve went so far as to order that Wells Fargo stop growing, so that it can take care of some of its consumer abuse problems.
If you suspect that you have been defrauded by a bank, credit card, loan or other consumer product, contact Jacobs Legal in Miami today to discuss your rights and see what claims you may have to protect yourself.