Wells Fargo fires 5300 people for fraud

[GoodSteward]

Wow, and my company just switched over to them for retirement. I also have 2 vehicle loans with them still. I want those gone bad.

http://jessejones.com/story/5300-wells-fargo-employees-fired-for-creating-unauthorized-accounts/

[james.hendrickson]

Wow is right...the Consumer Finance Protection Bureau says Wells opened something like 500,000 fake accounts without customers knowledge to meet their internal sales goals.

This is seems grossly criminal. It seems me that Wells is getting off light with a 100 million dollar fine. One could argue they should be shut down.

My other thought is that it might be time to short wells stock or look to buy on a dip - the stock will probably come back.

[james.hendrickson]

Here is the consent decree from the CFBP - the numbers are shocking.

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Consumer Financial Protection Bureau Fines Wells Fargo $100 Million for Widespread Illegal Practice of Secretly Opening Unauthorized Accounts

Bank Incentives to Boost Sales Figures Spurred Employees to Secretly Open Deposit and Credit Card Accounts

SEP 08, 2016

WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) fined Wells Fargo Bank, N.A. $100 million for the widespread illegal practice of secretly opening unauthorized deposit and credit card accounts. Spurred by sales targets and compensation incentives, employees boosted sales figures by covertly opening accounts and funding them by transferring funds from consumers’ authorized accounts without their knowledge or consent, often racking up fees or other charges. According to the bank’s own analysis, employees opened more than two million deposit and credit card accounts that may not have been authorized by consumers. Wells Fargo will pay full restitution to all victims and a $100 million fine to the CFPB’s Civil Penalty Fund. The bank will also pay an additional $35 million penalty to the Office of the Comptroller of the Currency, and another $50 million to the City and County of Los Angeles.

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

The full text of the CFPB’s Consent Order can be found at: http://files.consumerfinance.gov/f/d...nsentorder.pdf

Wells Fargo, headquartered in Sioux Falls, S.D., is one of the biggest banks in the country and offers many consumer financial products and services, including savings and checking accounts, credit cards, debit and ATM cards, and online-banking services. In recent years, the bank has sought to distinguish itself in the marketplace as a leader in “cross selling” these products and services to existing customers who did not already have them. When cross selling is based on efforts to generate more business from existing customers based on strong customer satisfaction and excellent customer service, it is a common and accepted business practice. But here the bank had compensation incentive programs for its employees that encouraged them to sign up existing clients for deposit accounts, credit cards, debit cards, and online banking, and the bank failed to monitor the implementation of these programs with adequate care.

According to today’s enforcement action, thousands of Wells Fargo employees illegally enrolled consumers in these products and services without their knowledge or consent in order to obtain financial compensation for meeting sales targets. The Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits unfair, deceptive, and abusive acts and practices. Wells Fargo’s violations include:

Opening deposit accounts and transferring funds without authorization: According to the bank’s own analysis, employees opened roughly 1.5 million deposit accounts that may not have been authorized by consumers. Employees then transferred funds from consumers’ authorized accounts to temporarily fund the new, unauthorized accounts. This widespread practice gave the employees credit for opening the new accounts, allowing them to earn additional compensation and to meet the bank’s sales goals. Consumers, in turn, were sometimes harmed because the bank charged them for insufficient funds or overdraft fees because the money was not in their original accounts.
Applying for credit card accounts without authorization: According to the bank’s own analysis, Wells Fargo employees applied for roughly 565,000 credit card accounts that may not have been authorized by consumers. On those unauthorized credit cards, many consumers incurred annual fees, as well as associated finance or interest charges and other fees.
Issuing and activating debit cards without authorization: Wells Fargo employees requested and issued debit cards without consumers’ knowledge or consent, going so far as to create PINs without telling consumers.
Creating phony email addresses to enroll consumers in online-banking services: Wells Fargo employees created phony email addresses not belonging to consumers to enroll them in online-banking services without their knowledge or consent.

Enforcement Action

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions violating consumer financial laws, including engaging in unfair, deceptive, or abusive acts or practices. Today’s order goes back to Jan. 1, 2011. Among the things the CFPB’s order requires of Wells Fargo:

Pay full refunds to consumers: Wells Fargo must refund all affected consumers the sum of all monthly maintenance fees, nonsufficient fund fees, overdraft charges, and other fees they paid because of the creation of the unauthorized accounts. These refunds are expected to total at least $2.5 million. Consumers are not required to take any action to get refunds to which they are entitled.
Ensure proper sales practices: Wells Fargo must hire an independent consultant to conduct a thorough review of its procedures. Recommendations may include requiring employees to undergo ethical-sales training and reviewing the bank’s performance measurements and sales goals to make sure they are consistent with preventing improper sales practices.
Pay a $100 million fine: Wells Fargo will pay a $100 million penalty to the CFPB’s Civil Penalty Fund. Today’s penalty is the largest the CFPB has imposed to date.

###

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.

[TexasHusker]

The financial industries are fraught with this sort of behavior. Do a Google search on Edward Jones pyramid schemes, Henry Blodgett and Merrill Lynch, and so on.

It's sickening.

A not so funny story:

At my former company, we had a retirement provider (XYZ Company) that offered literally hundreds of mutual funds to invest in. At the time, I was 100% natural resources funds, which I made a ton of money on. Well, natural resources went into a deep bear market, with my $500K becoming $350K. I didn't panic - I was just going to ride it back up.

NOPE. Because in the depths of that bear market, my company changed retirement providers - to ABC Company whose reps played golf with our CEO all the time. So...I was liquidated out of my natural resources fund at the changeover and ABC didn't offer those funds any more! So I was basically stuck out of that sector with no way to recover!

That was the end of the 401K game for me. I quit, took my money, paid my taxes and penalties, invested it, and got on with my life.

Good riddance.

[Thrif-t]

I find it hard to believe that all these people that they opened fraudulent accounts for and funded with actual accounts $$ didn't come to light before now. I mean really wouldn't these new accounts show up on a credit report? People wouldn't notice money missing from accounts that incurs fees and question it?

[james.hendrickson]

I think what happened was people did figure it out and when the CFPB got enough complaints they got the bureaucratic wheels turning and worked the situation through their enforcement arm.

I got no real love for the CFBP but they seem to be proving their worth - I think Well's actions are shocking and outrageous.

[tripods68]

I closed my Wells Fargo account the moment I left the company over a decade ago. Too many shenanigans and questionable sales practices were happening all around just to meet their monthly sales goals.

[GoodSteward]

I closed my Wells Fargo account the moment I left the company over a decade ago. Too many shenanigans and questionable sales practices were happening all around just to meet their monthly sales goals.

Based on what just happened that's an understatement! lol

[DaveInPgh]

My wife sent me this story yesterday. No personal or professional relationships with Wells Fargo, but sadly the story didn't shock me. In fact, very little shocks me anymore. Morals have been on a steady decline for a very long time.

[Jluke]

At my former company, we had a retirement provider (XYZ Company) that offered literally hundreds of mutual funds to invest in. At the time, I was 100% natural resources funds, which I made a ton of money on. Well, natural resources went into a deep bear market, with my $500K becoming $350K. I didn't panic - I was just going to ride it back up.

NOPE. Because in the depths of that bear market, my company changed retirement providers - to ABC Company whose reps played golf with our CEO all the time. So...I was liquidated out of my natural resources fund at the changeover and ABC didn't offer those funds any more! So I was basically stuck out of that sector with no way to recover!

That was the end of the 401K game for me. I quit, took my money, paid my taxes and penalties, invested it, and got on with my life.

Good riddance.

I just went through this too where the 401k funds were ill-timely revised.

I'm hoping to avoid this in the future now by investing outside of the CORE offerings of the 401k plan. I now have access to mutual funds that I believe will not be "killed" in the future as they are the typical 3-fund type investment choices.

[Spiffster]

My brother worked for these asshats a few years ago... they put sales above all else to the point where it created a somewhat hostile work environment, so he left.
So they put their employees in a losing situation where cheating was all but required to level the playing field, then fired them for it. CLASSY! Good luck getting a job in the banking industry after getting canned for fraud. At least the execs who created the mess get to keep their jobs, because they did nothing wrong, right? F' Wells Fargo... ****ing evil POS.

[GoodSteward]

My brother worked for these asshats a few years ago... they put sales above all else to the point where it created a somewhat hostile work environment, so he left.
So they put their employees in a losing situation where cheating was all but required to level the playing field, then fired them for it. CLASSY! Good luck getting a job in the banking industry after getting canned for fraud. At least the execs who created the mess get to keep their jobs, because they did nothing wrong, right? F' Wells Fargo... ****ing evil POS.

There is no way this went on for as long as it did without execs knowing about it. I bet they didn't officially encourage it, but "avoided the subject." The only reason they did this is because they were found out....not because they discovered it.

[clatoden99]

Having worked in large financial organizations for years I find it incomprehensible that this fraud could be so widespread/unchecked.

[GoodSteward]

Having worked in large financial organizations for years I find it incomprehensible that this fraud could be so widespread/unchecked.

Unless the people who do the checks and balances are in on it. That's why I say there is no way this went this big, this long without people covering it up. From the sounds of it, they probably encouraged it.

[bjl584]

I have a 401K through them with my part time employer. I haven't experienced any issues with the account, but there is a small amount in it. It represents a very small piece of my overall portfolio.