Wells Fargo has announced that it has uncovered up to 3.5 million potentially fake bank and credit card accounts.
Wells Fargo is an American international banking and financial services holding company. It is one of the biggest banks in the world based on assets. In May 2017, Forbes placed the company’s value at $274.4 billion. Founded in 1852 and headquartered in San Francisco, it has around 2,69,100 employees.
In September 2016, it was revealed that Wells Fargo had been fined $185 million by the Consumer Financial Protection Bureau. The bank had opened millions of fraudulent savings and checking accounts on behalf of its clients without their consent. The company has fired 5,300 employees in relation to the illegal activity. Part of the reason why employees had resorted to such illicit activities was reportedly due to pressure placed on them to meet sales quotas. Sabrina Bertrand, who worked as a licensed personal banker for Wells Fargo in Houston in 2013, told CNNMoney, “I had managers in my face yelling at me. They wanted you to open up dual checking accounts for people that couldn't even manage their original checking account.”
In July 2017, details emerged that the company had forced 570,000 customers to buy car insurance that they didn’t even need. An internal review found that 20,000 customers may have defaulted on their loans and lost their cars in part due to these costs.
John Stumpf, then chairman and chief executive officer of Wells Fargo, stepped down as a result of this scandal.
Wells Fargo has now admitted that it has found a total of up to 3.5 million potentially fake bank and credit card accounts. This is 1.4 million more than it was earlier thought to be.
Wells Fargo's CEO Tim Sloan in a statement apologized to customers and the public noting, “We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank.” He added, “To rebuild trust and to build a better Wells Fargo, our first priority is to make things right for our customers, and the completion of this expanded third-party analysis is an important milestone. Through this expanded review, as well as the class action settlement, free mediation services, and ongoing outreach and complaint resolution, we’ve cast a wide net to reach customers and address their remaining concerns."
The revised estimate covers the time between January 2009 to September 2016. The company has said that it will pay customers an amount of $6.1 million as refund for the unauthorized bank and credit card accounts. It will also be refunding $910,000 to customers 528,000 reportedly improper online bill pay enrollments.
Mary Mack, head of Community Banking said, "We want to ensure we make things right for each and every customer who may have concerns about the impact of unacceptable sales practices.”
The bank faces civil and criminal lawsuits. It has already agreed to a $142 million national class action settlement with regards to fake accounts that were opened in 2002. The company’s shares remained largely unaffected by the disclosure.
Our assessment is that despite being one of the most profitable companies in the world, Wells Fargo is now mired in a deeply damaging scandal. It will be on the receiving end of multiple lawsuits from customers that the company had duped.