Wells Fargo will pay $100 million to the Consumer Financial Protection Bureau for illegally opening accounts for customers without their permission to overcharge them, the agency announced Thursday. The fine is the largest yet levied by the five-year-old agency.
The bureau said the bank’s employees opened up to 2 million credit card and debit accounts that may not have been authorized by customers to meet sales targets, transferring funds from existing accounts and then racking up charges and fees on those accounts.
The bank will have to pay restitution to customers as well as a $35 million penalty to the Office of the Comptroller of the Currency, which is a federal bank regulatory agency, and a $50 million fine to the city and county of Los Angeles, where the agencies’ enforcement action was filed in court.
On a press call Thursday afternoon, Los Angeles City attorney Mike Feuer encouraged current and former Wells Fargo customers to review their accounts and cancel ones they don’t want.
Wells Fargo said in a press release that it has restored $2.6 million to customers. The company said it reached the agreement with regulators to put the matter behind it and that “we regret and take responsibility for any instances where customers may have received a product that they did not request.”
Consumer Financial Protection Bureau Director Richard Cordray, in a statement issued by his agency, used the announcement to warn banks about the dangers of incentives that lead employees into illegal conduct. The fine “should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences.”
To meet sales goals and collect bonuses, the bureau said, Wells Fargo employees created the accounts that weren’t necessarily authorized by customers, going so far as to create fake email addresses or PINs for new accounts.
A 2013 investigation by the Los Angeles Times found that the bank’s employees were under enormous pressure to meet quotas for new accounts. Workers described being forced to work nights and weekend to meet goals, and facing the threat of being fired if they lagged, with managers telling them they would be working at McDonald’s.
Bureau officials said Thursday that those practices were widespread across the country.
Asked if the agency is investigating other banks for similar misbehavior, a bureau official responded that “we are constantly examining every different industry and marketplace over which we have authority.”
