Wells Fargo to Pay $190 Million for Illegally Opened Accounts

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Wells Fargo Bank must shell out $190 million to settle claims over what federal regulators are calling a “widespread illegal practice.” Federal authorities say bank employees’ secretly opened unauthorized deposit and credit card accounts to meet Wells Fargo sales targets and earn financial incentives.

According to the Consumer Financial Protection Bureau, thousands of Wells Fargo workers opened more than 2 million accounts without customer knowledge or consent, leaving the unsuspecting account holder on the hook for fees and other charges associated with the new accounts.

The Wells Fargo bank workers allegedly opened the new accounts in an effort to meet sales targets and earn bonus money.

As a result of the illegal account openings, Wells Fargo has been ordered to pay a $100 million fine to the CFPB — the largest penalty the federal consumer watchdog has ever imposed. The bank must also pay $35 million to the Office of the Comptroller of the Currency, $50 million to the City and County of Los Angeles, and $5 million more in what the bank is calling “customer remediation.”

Richard Cordray, CFPB director, says in a statement:

“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.”

According to the CFPB’s consent order, Wells Fargo has already terminated 5,300 employees involved with illegally opening the accounts. The bank issued the following statement regarding the settlement:

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 CFPB says Wells Fargo employees opened new accounts and transferred customers’ money, applied for customer credit cards, and issued and activated debit cards — all without customer knowledge or authorization.

What do you think of the Wells Fargo settlement? Share your comments below or on our Facebook page.

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