The bank agreed to pay for employees who opened fake accounts under customers' names to meet sales goals.
Earlier this month, banking giant Wells Fargo settled for $185 million with the city of Los Angeles after it was found the bank was opening accounts without the knowledge of their customers.
The city of Los Angeles, joined by the Consumer Financial Protection Bureau and the office of the Comptroller of the Currency, reached the settlement Sept. 8. Wells Fargo will pay $185 million in fines, plus $5 million in customer refunds.
Shady tactics cost consumers
A consent decree released by CFPB illustrates the tactics that Wells Fargo employees went through to meet their sales quotas. Since "at least" 2011, deposit and credit accounts for existing Wells Fargo customers were opened under their names, which racked up fees of about $2.5 million.
In total, the CFPB analysis found:
- 1,534,280 deposit accounts that were opened without authorization
- $2 million in fees accrued from the accounts
- 565,433 credit card applications submitted by Wells Fargo employees without clients' knowledge
- $403,145 in fees from the unauthorized credit cards
Employees had created fake email accounts so they could sign up customers for online services they didn't need, and many customers didn't notice until they began accumulating mysterious fees.
Pressure on employees to perform
Wells Fargo has reportedly fired 5,300 employees who participated in the shady practices. The bank also says they're taking responsibility for the actions of its employees and are putting their "customers' interests first 100 percent of the time."
Some employees have admitted that they couldn't and still can't conceivably reach the goals the Wells Fargo set for them. Although they weren't instructed by the bank to open the fake accounts, they were pressured to perform to receive incentives for services like opening an account.
Although the customers should be receiving refunds for the Wells Fargo employees' actions, some still worry their credit will suffer, or they can't trust a bank again. The CFPB handed Wells Fargo their largest fine ever - $100 million - because of the severity and widespread nature of the transgressions.
A spokesperson for Wells Fargo also noted that they've set more realistic sales goals, added more staff to track and monitor sales workers and are utilizing a "secret shopper" program to ensure their employees' behavior is up to par.
Still, some customers note they struggle with overdraft fees connected to credit cards they never asked for, which will put a dent in their credit score. Or that they can't trust Wells Fargo even if they repay them for the fees they took on. Could another bank do the same to them again?