Wells Fargo to pay $185M in settlement

CFPB imposes harshest fine ever in fake accounts scandal

Los Angeles Times

Federal officials have accepted a $185 million settlement with Wells Fargo over allegations that the bank’s employees, driven by strict sales quotas, regularly opened new accounts for customers without their knowledge.

The settlement, announced Thursday, calls for the San Francisco banking giant to pay $100 million in penalties to the Consumer Financial Protection Bureau and $35 million to the Office of the Comptroller of the Currency. It also will pay $50 million in penalties to local officials and to compensate account holders for fees related to bogus accounts. The bank will not admit any wrongdoing.

The questionable practices were uncovered by a 2013 Los Angeles Times investigation that found Wells Fargo pressured its employees to open more accounts and that some employees even resorted to opening fake ones to meet sales goals.

Last year, Los Angeles City Attorney Mike Feuer filed a lawsuit that alleged Wells Fargo “victimized their customers by using pernicious and often illegal sales tactics” and policies that have “driven bankers to engage in fraudulent behavior.”

“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” said Richard Cordray, director of the CFPB, in a statement Thursday. “Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed.”

The bank has consistently said such practices are not widespread and that workers who cheat to meet sales goals are disciplined or fired. In a statement Thursday, Wells Fargo said it has set aside $5 million to cover refunds to customers.

“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 its statement.