Feds order Wells Fargo to pay $100 million fine for shady sales practices


Yikes: Wells Fargo, the second-biggest bank in Florida and third-largest in the nation, created hundreds of thousands of phony accounts on behalf of its customers, the U.S. Consumer Financial Protection Bureau said Thursday.

The CFPB ordered Wells Fargo (NYSE: WFC) to pay a $100 million fine, the largest ever imposed by the agency. Wells Fargo also must cough up $2.6 million in refunds. In all, Wells Fargo said the episode will cost it $185 million.

According to the CFPB, Wells Fargo:

  • Opened accounts and transferred funds without customers’ permission: Wells Fargo employees opened 1.5 million deposit accounts that might not have been authorized by consumers. “Employees then transferred funds from consumers’ authorized accounts to temporarily fund the new, unauthorized accounts,” the agency said. “This widespread practice gave the employees credit for opening the new accounts, allowing them to earn additional compensation and to meet the bank’s sales goals. Consumers, in turn, were sometimes harmed because the bank charged them for insufficient funds or overdraft fees because the money was not in their original accounts.”
  • Applied for credit cards without customers’ permission: Wells Fargo employees applied for 565,000 credit card accounts that might not have been authorized by consumers. Wells Fargo collected annual fees, finance charges and other fees.
  • Issued and activated debit cards without customers’ permission: “Wells Fargo employees requested and issued debit cards without consumers’ knowledge or consent, going so far as to create PINs without telling consumers,” the CFPB said.
  • Creating phony email addresses to enroll consumers in online-banking services: Wells Fargo employees created phony email addresses not belonging to consumers to enroll them in online-banking services without their knowledge or consent.

Said the company in a statement: “Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.”

Wells Fargo’s aggressive tactics were the subject of a suit earlier this year by the city of Los Angeles.

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