Banks received a warning from the federal government Monday not to employ the kind of sales tactics implicated in Wells Fargo’s fake accounts scandal.
The Consumer Financial Protection Bureau issued a bulletin Monday highlighting concerns that high-pressure sales tactics can lead to crime and telling banks to avoid specific practices that lawmakers have faulted Wells Fargo for employing.
“Tying bonuses and job security to business goals that are unrealistic or not properly monitored can lead to illegal practices like unauthorized account openings and deceptive sales tactics,” said bureau Director Richard Cordray, adding that the firms he oversees should create incentives for good customer service, not “fraud and abuse.”
While the bulletin did not mention Wells Fargo by name, it warned against the practices that led to Wells Fargo employees opening millions of unwanted accounts for customers, resulting in regulatory fines, multiple congressional and federal probes, thousands of firings at the company, and the resignation of its CEO.
Incentives to boost sales, the bureau warned, can lead to abuses such as opening accounts without customers’ knowledge, adding products to credit cards or pushing customers into high-fee products.
Wells Fargo was accused of aggressively pressing employees to “cross-sell” products to customers. Rather than fall short of their targets, many employees opened accounts for customers without their consent, in some cases creating passwords or email addresses for them.
In testimony to Congress, former CEO John Stumpf defended those targets as a method of requiring employees to be attentive to customers, rather than “apathetic.”
Now, however, the company faces a Labor Department investigation into whether it abused its employees, particularly by forcing them to work unpaid overtime to meet the targets.
