Wells Fargo slapped with $185M fine for opening unauthorized accounts

Wells Fargo slapped with $185M fine for opening unauthorized accounts
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Thousands of Wells Fargo employees secretly opened deposit and credit card accounts to boost their sales numbers, racking up millions in fees and other charges for consumers, a regulator said Thursday.

The Consumer Financial Protection Bureau (CFPB) fined Wells Fargo $185 million, including a $100 million penalty the bank will pay to the CFPB's civil penalty fund — the largest fine ever levied by the regulator.  

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“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” said CFPB Director Richard Cordray.

"Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed," Cordray said.

"Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences."

A Wells Fargo spokeswoman said about 5,000 managers and employees were fired for their actions, representing about 1 percent of the 100,000 people who worked in their branches over the five-year period involved. 

"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," the spokeswoman told The Hill. 

In a statement, Wells Fargo said the bank “reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us."

"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," the bank said.

Employees were spurred to open more than 2 million deposit and credit card accounts that may not have been authorized by consumers with rewards for hitting sales targets, according to the bank’s own analysis.

That includes about 1.5 million deposit accounts and 565,000 credit card accounts. 

Wells Fargo said it has refunded $2.6 million to affected customers for monthly maintenance fees, insufficient fund fees, overdraft charges and other fees paid.

The bank also will pay a $35 million penalty to the Office of the Comptroller of the Currency and another $50 million to the City and County of Los Angeles.

After creating the accounts, employees transferred funds from consumers’ authorized accounts to temporarily fund the new ones.

"This widespread practice gave the employees credit for opening the new accounts, allowing them to earn additional compensation and to meet the bank’s sales goals," the CFPB report said. 

"Consumers, in turn, were sometimes harmed because the bank charged them for insufficient funds or overdraft fees because the money was not in their original accounts," the regulator said.

In some instances, employees created PINs and fake email addresses without any authorization. 

Wells Fargo agreed to hire an independent consultant to oversee its procedures.