Wells Fargo Finds 1.4 Million More Potentially Fake Customer Accounts
Embattled banking giant Wells Fargo is in even deeper trouble after finding evidence that an additional 1.4 million customer accounts fraudulently opened in customer’s names by employees under pressure to meet unrealistic quotas. If verified, it would bring the total number of unauthorized accounts to 3.5 million since this scandal was first unveiled last year. The revelation marks a 70 percent increase in the scope of the issue compared to the bank’s initial estimate.
While this issue isn’t necessarily political, it does raise questions about politicians still pressing for the weakening of the Consumer Financial Protection Bureau and the Dodd-Frank Act. When the nation’s third-largest bank and biggest provider of mortgages in the U.S. has been dubbed “rogue” by financial analysts, it doesn’t bode well for loosening protections on consumer rights and accountability.
The need for such oversight is even further underscored amid criticism that the bank was snail-like in its acknowledgement of its misdeeds. Last fall, the bank agreed to pay $185 million to settle three government lawsuits pertaining to the creation of those phony accounts. The bank conceded more than 5,000 employees were involved in creating fake customer accounts using customer names and information – without customer knowledge or approval. Upper-level management tied employee salaries and bonuses to the number of accounts they were able to create, and put an enormous amount of pressure on workers to meet sales goals that were clearly unrealistic. In turn, employees learned they could create customer accounts without their knowledge.
Initially, the bank said they uncovered some 2.1 million suspicious accounts created between 2011 and 2015. However, bank officials did say the issues could have started earlier, and the review would be expanded to include accounts created as far back as 2009 and as recently as 2016.
As our Miami consumer rights lawyers understand, in so doing, the bank not only found evidence of more unauthorized accounts, but also that customers were unknowingly signed up into the institution’s online bill pay system. The bank reportedly found some 530,000 cases wherein consumers were signed up for the service, despite never having granted their consent. The bank has promised to refund more than $900,000 to victims of this who incurred fees or charges as a result. While the online system is free at this point, it was offered at the time with fees.
Wells’s Fargo’s CEO released a statement apologizing for the violation of consumer rights and promising to ensure such issues don’t arise again. But of course, we may still be only at the tip of the iceberg. As noted recently by Warren Buffet: There is rarely only a single cockroach in the kitchen.
Further, it raises questions about how this type of action, indicative of the larger corporate culture at Wells Fargo and potentially other banks, was able to go undetected for such an extended period of time. A number of investigations by states attorneys general as well as the U.S. Department of Justice are still pending. Additionally, dozens of consumer rights groups have signed on to a letter directed to leaders of Congress, urging them to hold Wells Fargo executives to account via congressional hearings, pointing out bank executives might have intentionally mislead lawmakers in prior testimony.
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