Wells Fargo fined for years of harm to customers
Credit cards issued secretly without a customer’s consent. Bank employees creating fake email accounts to sign up customers for online banking services. Customers accumulating late fees on accounts they never even knew they had.
Those illegal banking practices were widespread and pervasive at Wells Fargo, which on Thursday was fined $185 million, including a $100 million penalty from the Consumer Financial Protection Bureau, the largest such penalty the agency has ever issued.
Federal banking regulators said the practices reflected serious flaws in the internal culture and oversight at Wells Fargo, one of the nation’s largest banks.
In all, Wells Fargo employees opened roughly 1.5 million bank accounts and applied for 565,000 credit cards that may not have been authorized by their customers, the regulators said in a news conference.
The bank has 40 million retail customers.
Regulators said the bank’s employees — many of whom have since been fired — had been motivated to open the unauthorized accounts by compensation policies that rewarded them for drumming up new business.
Many current and former Wells Fargo employees told regulators they had felt extreme pressure to expand the number of new accounts at the bank.
“Unchecked incentives can lead to serious consumer harm, and that is what happened here,” said Richard Cordray, director of the Consumer Financial Protection Bureau.
This is an ugly moment for Wells Fargo, one of the few large American banks that have managed to produce consistent profit increases since the financial crisis.
In addition to the fine from the consumer protection bureau, Wells Fargo paid an additional $35 million to the Office of the Comptroller of the Currency and $50 million to the city and county of Los Angeles.
Wells Fargo also has refunded $2.5 million to customers and agreed to hire an independent consultant to review its procedures.
Regulators said such illegal sales practices had been going on since at least 2011.
“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 in a statement.