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Wells Fargo fined for opening two million accounts without customer consent
- More than two million fake deposit and credit card accounts were created since 2011.
- Bank employees funded the fake accounts by transferring funds from authorized accounts.
The Consumer Financial Protection Bureau announced Thursday that it fined Wells Fargo $100 million for the widespread illegal practice of secretly opening unauthorized deposit and credit card accounts.
According to the CFPB, since 2011, bank employees, incentivized by sales commissions and targets, opened more than two million fake deposit and credit card accounts for existing customers. The employees funded the fake accounts by transferring funds from consumers’ authorized accounts without their knowledge or consent, often racking up fees or other charges.
Wells Fargo will pay full restitution to all victims and a $100 million fine to the CFPB’s Civil Penalty Fund. The bank will also pay an additional $35 million penalty to the Office of the Comptroller of the Currency, and another $50 million to the City and County of Los Angeles.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions violating consumer financial laws.
"Today’s action should serve notice to the entire industry. If the incentive compensation schemes or sales targets are implemented in ways that threaten harm to consumers and lead to violations of the law, then banks and other financial companies will be held accountable," said Richard Cordray, Director of the Consumer Financial Protection Bureau in prepared remarks regarding the case. "We have seen the risk that such programs pose to consumers across the entire financial sector."
In response, Wells Fargo stated that in addition to the imposed penalties, it will take disciplinary action against related employees and consuct widespread educational programs across the bank. About 5300 employees have already been fired in relation to this case, according to the Los Angeles City Attorney’s office.
"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," read the bank’s official response.