Wells Fargo Fined $185 Million Over Improper Account Openings

Wells Fargo Fined $185 Million Over Improper Account Openings

Wells Fargo Fined $185 Million Over Improper Account Openings

For that and other supremely shady sales practices, Wells Fargo has agreed to pay a $185 million fine and fired more than 5,300 employees - roughly 1% of its entire workforce.

The San Francisco-based bank will pay $100 million to the Consumer Financial Protection Bureau, a federal agency created five years ago; $35 million to the Office of the Comptroller of the Currency and $50 million to the City and County of Los Angeles.

On Thursday, Wells was hit with a record fine for covertly opening some 2 million unauthorized customer credit card and deposit accounts, draining real accounts to fund them, and charging fees for services the customers didn't request.

The lender opened more than 2 million accounts that consumers may not have known about, the Consumer Financial Protection Bureau said in a statement Thursday. These workers also requested and issued debit cards without consumers' knowledge or consent, going so far as to fabricate personal identification numbers and phony email addresses, to enroll unsuspecting customers in online banking services without their knowledge or consent.

Wells said in a statement that it settled "in the interest of putting this matter behind us". "They should never be taken advantage of by their banks". It also refunded $2.6 million in fees it collected from customers.

Retail and commercial banking giant Wells Fargo will pay more than US$185 million in fines after USA regulators accused the bank of secretly opening accounts without customers' knowledge, officials said Thursday.

The L.A. City attorney Mike Feuer sued the San Francisco bank past year alleging the sales tactics created a "fee generating machine" that led employees to open bogus accounts to meet strict quotas.

The council recently budgeted about $5.8 million to fund such a division in Feuer's office.

Money in customers' accounts were transferred to these new accounts without authorization.

Wells Fargo is being slapped with the largest penalty since the CFPB was founded in 2011.

At the recent close, Wells Fargo & Company (NYSE:WFC) tinted loss of -1.11% (-0.56 points) to US$49.99.

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"Accounts refunded represented a fraction of 1% of the accounts reviewed, and refunds averaged $25", the statement said.

Despite the LA Times investigation, Wells Fargo is still known for having aggressive sales goals for its employees.

Feuer, the Los Angeles City Attorney, said his office also heard from current and former employees about the pressure they felt to sell more products.

The bank reported in the second quarter that retail customers maintained an average of 6.27 products per household.

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