Consumer Fraud

Wells Fargo Wasn’t the Only Bank to Open Unauthorized Customer Accounts

Wells Fargo fraud Wells Fargo Wasn’t the Only Bank to Open Unauthorized Customer AccountsWells Fargo wasn’t an outlier when it opened 3.5 million unauthorized customer accounts. Federal regulators found that dozens of other banks opened nearly 10,000 deposit and loan accounts for customers without their consent.

The new banking fraud revelation came in testimony given by U.S. Comptroller of the Currency (OCC) Joseph Otting before the Senate Banking Committee June 14.

Although the number of newly discovered fraudulent accounts is miniscule in comparison to the 3.5 million bogus accounts Wells Fargo bankers opened for customers, it points to the need for banks to put better safeguards in place.

According to USA Today, banking regulators discovered the accounts in a review of about 40 banks over a three-year period. The unauthorized accounts included new mortgages, auto loans, credit cards, checking, savings, and money market accounts.

“The OCC did not find pervasive or systemic issues in regard to improper account openings but did find the need for banks to improve their policies, procedures and controls,” Otting testified during Thursday’s hearings.

There is no indication at this time that the banks, which Otting refused to name publicly, will be penalized for the fraud. The decision by Otting, himself a former banker, to keep the identities of the banks a secret drew the ire of some Democratic members of the Congressional panels, who demanded full disclosure and accountability.

“We are concerned that the decision to keep the specific findings of the review private leaves consumers exposed to past and future predatory behavior and impedes our ability as lawmakers to effectively conduct oversight over the banking industry,” eight Senate Democrats wrote in a June 14 letter to Otting.

The letter, which references the Wells Fargo fraud and the enforcement actions against it, also underscores the need for regulatory measures that protect consumers from fraud.

“Consumers deserve to know whether the institutions with which they choose to bank engage in predatory sales practices. Keeping key details of the review private leaves consumers vulnerable and unaware of any potential abuses their financial institutions perpetrated against them as well as any similar practices by other bank.”

The letter asserts that “ultimately, failure to disclose detailed results of the review leaves the American public and bank investors blind to the possibility that Wells Fargo’s misconduct was an industrywide problem.”

The revelations come days after Mick Mulvaney, acting director of the Consumer Financial Protection Bureau (CFPB) dissolved the Consumer Advisory Board as part of a broader effort to undermine the authority of the agency he was appointed to lead.