Consumer Fraud

Wells Fargo Unauthorized Account Scandal Nearly Doubles

Wells Fargo fraud Wells Fargo Unauthorized Account Scandal Nearly DoublesWells Fargo announced Thursday that an internal investigation uncovered almost twice the number of credit card and deposit accounts opened without the customer’s knowledge or consent than the bank had originally estimated.

The investigation, led by a third-party firm hired by Wells Fargo, found that 3.5 million customer accounts were potentially unauthorized, up 70 percent from the 2.1 million potentially unauthorized accounts it estimated a year ago.

Wells Fargo CEO Timothy Sloan took measures to lessen the potential shock of this news by warning investors and customers weeks ago that the unauthorized accounts scandal was likely a lot larger than originally estimated.

Original estimates focused on the time period between May 2011 and mid-2015, but investigators widened the scope of their probe, going back to January 2009 and ending as recently as September 2016.

“We are working hard to ensure this never happens again and to build a better bank for the future,” Mr. Sloan said in a written statement announcing the review’s findings. “We apologize to everyone who was harmed.”

While Wells Fargo did not have a policy permitting bank representatives to open unauthorized accounts, the bank’s sales policies encouraged the misconduct by aggressively raising the bar on sales quotas and pressuring employees to meet them. The bank rewarded reps who met the ambitious sales targets and threatened those who did not with job loss. The bank also turned a blind eye to employees and customers who complained about the fraudulent practice.

According to The New York Times, Wells Fargo’s probe of unauthorized accounts also raised another fraudulent practice: enrolling customers in the bank’s online bill payment service without the customers’ knowledge or consent.

The probe found 528,000 cases in which Wells Fargo customers had been signed up for online bill paying services involuntarily, and the bank said it would refund those customers $910,000 in service fees or charges.