Report: Additional 1.4 Million Unauthorized Wells Fargo Accounts Uncovered
An investigation into Wells Fargo’s unauthorized account scandal is now apparently worse than initially believed. The financial institution says it has uncovered approximately 3.5 million potentially fraudulent bank accounts created by employees under intense sales pressure without consumers’ knowledge. That figure involves the 2.1 million accounts that were previously uncovered between 2011 and 2015, plus more that were revealed in an in-depth probe that stretched back to 2009 through 2016.
This is the latest development in a scandal for the bank that started a year ago – one of many the bank has been facing down in recent years, marring consumer trust in its practices.
Of those accounts discovered, the CEO now says nearly 200,000 customers were hit with fees from these accounts that were unnecessary. That’s up from the previous estimate of 130,000. On top of that, approximately 530,000 customers were unknowingly signed up for an online bill pay.
In the review, Wells Fargo acknowledged “unacceptable” sales practices at retail banks, stemming from high-pressure to reach unrealistic sales goals. Employees’ salaries were directly tied to how many new accounts they opened. Other incentives were available to top sellers. The bank has apologized for the consumer rights violations, and promises to make things right. Gone are the sales goals. Some 5,000 employees and managers have been fired. The bank also plans to pay out millions in refunds.
The total slated to be refunded to holders of unauthorized bank and credit card accounts is $6.1 million, an increase from the previous $3.3 million that had been designated. In addition to the $6 million, Wells Fargo has vowed to refund more than $900,000 to customers wrongly enrolled in the online bill payment programs. The bank has also stated it will pay a $140 million settlement to resolve earlier complaints of opening phony, unauthorized accounts going back to 2002. A judge preliminary approved that agreement this summer.
Of course, one shouldn’t jump to the conclusion the bank is doing this of its own volition or the goodness of the CEO’s heart. The reality is government regulators are likely to take it easier on the bank if it agrees to pay back some of those funds now.
Further, legislative watch dogs aren’t taking it easy on the bank. Sen. Elizabeth Warren (D-Mass.), says the revelation of additional unauthorized customer accounts is “unbelievable.” She called for holding additional Congressional hearings and asked that board members on the bank who served during the time period these practices were ongoing be removed.
The Federal Reserve does have the authority to remove directors, but has not as of yet responded to requests about whether it would initiate such a move.
Analysts with various research groups have predicted that each new scandal unfolding, new light is shed on other practices. For instances, just this summer, the bank conceded it had force-placed auto insurance on some 570,000 consumers who did not need the coverage. Of those, about 20,000 suffered vehicle repossession directly because of those costs.
The bank has also come under fire for jacking up credit card fees on mom-and-pop small businesses, though the bank fervently denies this. Although the allegation has been proven at this juncture, the bank’s track record doesn’t bode well for this and future scandals.
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