One of America’s biggest banks issued an apology along with a $190 million payout over a widespread fraud involving more than 5,000 bonus-chasing employees to create phony credit and checking accounts.
Wells Fargo confirmed it had reached a settlement with the federal government and other authorities after its retail customers were signed up for products and services without their knowledge.
The Consumer Financial Protection Bureau, which fined Wells Fargo $100 million, said in a statement the bank offers bonuses to employees, which it says “encouraged them to sign up existing clients for deposit accounts, credit cards, debit cards and online banking.”
But thousands of these employees took advantage of this incentive system over at least the last five years, by opening accounts on behalf of customers without their permission in order to meet these sales targets.
They would then move some money from customers’ existing accounts into the fraudulent ones, which sometimes led to customers getting hit with overdraft fees, interest charges and late fees.
CNN Money reports that 5,300 Wells Fargo workers have been fired over the scheme, which is believed to have seen as many as 1.5 million phony deposit accounts created, and more than half a million credit accounts.
Workers also issued and activated debit cards without consent – in some cases creating PIN numbers without telling customers – and also created phony email addresses to enroll customers in online banking, the CFPB said.
Of the $190 million Wells Fargo will pay out, all but $5 million of it is in the form of penalties and fines. The remaining $5 million will refund all wronged customers.
In its statement, Wells Fargo said: “Wells Fargo 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.”
Sioux Falls-based Wells Fargo employs around 265,000 workers, according to its website.