A settlement with the Consumer Financial Protection Bureau includes the largest penalty every imposed during its history. Over 5,000 employees were fired.
On Thursday, the bureau issued a statement indicating that a consent order was issued against Wells Fargo & Co.’s banking subsidiary, Wells Fargo Bank, N.A.
Thousands of the Sioux Falls, South Dakota-based financial institution’s employees are accused of fraudulently opening new accounts to earn financial incentives.
The bogus accounts opened without customers’ knowledge included deposit accounts, which were funded from unauthorized transfers from legitimate accounts, and credit cards.
Fake email addresses were used to enroll clients in online-banking services.
An analysis conducted by Wells Fargo reportedly found that 1.5 million deposit accounts were opened that might not have been authorized by the customers. Around 85,000 of those accounts incurred roughly $2 million in fees — which the bank is in the process of refunding.
In addition, Wells Fargo’s analysis found that employees submitted applications for
565,443 credit-card accounts that might not have been authorized. Approximately 14,000 of the accounts incurred $403,145 in fees, which Wells Fargo is also in the process of refunding.
Debit cards were issued and activated without customer authorization, though the number of cards was not disclosed, and no fees were mentioned.
The alleged actions violated the Consumer Financial Protection Act of 2010.
There was no mention of mortgage-related abuse in the consent order.
Wells Fargo reportedly terminated roughly 5,300 employees for engaging in the improper sales practices, which occurred from May 2011 through July 2015.
In addition to taking steps to prevent the illegal practices, the consent order requires that Wells Fargo pay a $100 million fine, “the largest penalty the CFPB has ever imposed,” CFPB Director Richard Cordray stated in the announcement.
“Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us,” Wells Fargo said in a statement. “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 company’s statement additionally indicated that related agreements were reached with
the Office of the Comptroller of the Currency, which the CFPB said will collect an additional $35 million penalty, and the Office of the Los Angeles City Attorney, which will receive another $50 million.
Wells Fargo said that customer remediation totals $5 million.
