Wells Fargo Is Fined $185 Million Over Unapproved Accountsby
Regulators say bank employees broke the law to hit sales goals
CFPB and OCC say more than 2 million accounts were opened
Wells Fargo & Co. will pay $185 million to resolve claims that bank employees opened deposit and credit-card accounts without customers’ approval to satisfy sales goals and earn financial rewards, U.S. regulators said.
The lender opened more than 2 million accounts that consumers may not have known about, the Consumer Financial Protection Bureau said in a statement Thursday. Wells Fargo, which fired 5,300 employees over the improper sales practices, agreed to pay a record $100 million fine to the CFPB, $35 million to the Office of the Comptroller of the Currency and $50 million to the Los Angeles city attorney to settle the matter. The San Francisco-based bank also will compensate customers who incurred fees or charges, the agencies said.
“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” CFPB Director Richard Cordray said in his agency’s statement. “Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed.”
The bank agreed to resolve the allegations without admitting or denying the agencies’ accusations, and said in a statement that it had set aside $5 million for customer remediation.
“We regret and take responsibility for any instances where customers may have received a product that they did not request,” Wells Fargo said in its statement.
The thousands of employees terminated by Wells Fargo included managers and were dismissed over five years, said Mary Eshet, a bank spokeswoman.
“On an annual basis, more than 100,000 team members worked in our stores,” she said. “While we regret every interaction that was not handled properly, the number of instances and team members involved represent a very small portion of our business.”
Wells Fargo hadn’t disclosed the investigation in recent regulatory filings.
“Each quarter we consider all available relevant and appropriate facts and circumstances in determining whether a litigation matter is material and disclosed in our public filings,” Eshet said. “Based upon that review, we determined that the matter was not material.”
Thousands of employees at Wells Fargo were involved in opening accounts and moving funds that resulted in customers getting charged fees for services they didn’t seek, according to the regulators. Los Angeles City Attorney Mike Feuer sued Wells Fargo last year and accused the bank of high-pressure quotas for workers that encouraged them to skirt the rules.
“When I worked at Wells Fargo, I faced the threat of being fired if I didn’t meet their unreasonable sales quotes every day, and it’s high time that Wells Fargo pays for preying on consumers’ financial livelihoods,” Khalid Taha, a former employee, said in a statement.
Wells Fargo shares rose 13 cents to $49.90 in New York trading Thursday. The stock has dropped 8.2 percent this year, the third-worst performance in the 24-company KBW Bank Index.