Washington, DC It's bad enough when consumers have to pay excessive bank fees for transactions that have been reordered, or when they haven't authorized overdraft on their account. But now allegations have been raised that Wells Fargo not only created millions of unauthorized accounts, it also charged customers for those secret accounts. The Consumer Financial Protection Bureau (CFPB) has fined Wells Fargo $100 million for the practice, but consumers might understandably be wondering what other ridiculous fees banks will charge to increase their profits.
According to a news release from the CFPB, the agency handed out the largest fine it has ever imposed to Wells Fargo for its actions. Employees of the company allegedly opened unauthorized debit and credit card accounts without the knowledge or consent of consumers and then transferred funds from those accounts also with no customer knowledge or consent. In the process of doing so, fees and other charges were racked up, boosting Wells Fargo's profits and improving sales figures.
In all, more than two million unauthorized accounts may have been opened. Included in the fees consumers may have been charged without authorization were annual fees, finance charges, and interest charges associated with around 565,000 unauthorized credit accounts; and overdraft or insufficient funds fees charged to authorized accounts when employees transferred money from authorized accounts to unauthorized accounts. The CFPB imposed its penalties against Wells Fargo for failing to monitor the implementation of its incentive programs to ensure employees did not break the rules when pursuing sales quotas.
"Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed.
Wells Fargo will reportedly pay a $100 million fine to the CFPB, as well as paying at least $2.5 million to consumers who were affected by the unauthorized maintenance fees, insufficient funds fees, and overdraft charges. Additionally, the bank will pay $35 million to the Office of the Comptroller of the Currency and $50 million to the City and County of Los Angeles.
"Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses," said CFPB Director Richard Cordray in a statement. "Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed."
The bank reportedly confirmed to CNN Money (9/9/16) that 5,300 employees had been fired for participating in unauthorized account creation - which involved creating fake PIN numbers and email addresses to open the accounts. Although the CFPB doesn't comment on why it conducts investigations or what brought Wells Fargo to its attention, Los Angeles City Attorney Mike Feuer filed a lawsuit against Wells Fargo in 2015 after hearing reports of unauthorized accounts through a December 2013 report in the Los Angeles Times.
That report quoted employees as saying they would fired or given other consequences for not meeting sales goals.
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