The scope of the scandal is shocking. An analysis conducted by a consulting firm hired by Wells Fargo concluded that bank employees opened up 1,534,280 deposit accounts that may not have been authorized, according to the CFPB.
The way it worked was that employees moved funds from customers’ existing accounts into newly-created accounts without their knowledge or consent, regulators say.
Additionally, Wells Fargo employees also submitted applications for 565,443 credit-card accounts without their knowledge or consent, the CFPB said the analysis found.
Wells Fargo is being slapped with the largest penalty since the CFPB was founded in 2011. The bank agreed to pay $185 million in fines, along with $5 million to refund customers.
“We regret and take responsibility for any instances where customers may have received a product that they did not request,” Wells Fargo said in a statement.
That’s an awful lot of employees. That is a sufficient number of employees, that firing employees (and paying fines) is not nearly enough. Things like this don’t happen in a vacuum. With that number of employees, we’re talking about inducements without control or oversight. We’re likely talking about middle-manager participation, and acceptance or gross incompetence by the people above them. For what, exactly?:
Some customers noticed the deception when they were charged unexpected fees, received credit or debit cards in the mail that they did not request, or started hearing from debt collectors about accounts they did not recognize. But most of the sham accounts went unnoticed, as employees would routinely close them shortly after opening them. Wells has agreed to refund about $2.6 million in fees that may have been inappropriately charged.
Wells Fargo is famous for its culture of cross-selling products to customers — routinely asking, say, a checking account holder if she would like to take out a credit card. Regulators said the bank’s employees had been motivated to open the unauthorized accounts by compensation policies that rewarded them for opening new accounts; many current and former Wells employees told regulators they had felt extreme pressure to open as many accounts as possible.
As a long-time Wells Fargo customer, this is “take my business from the company” territory. Not out of some grand moral principle, but because this is the sort of thing that can screw around with your credit rating and haunt you for life. That’s even ignoring the $5,000,000 in fees they collected (which, for them, is actually kind of a drop in the bucket. As likely as not caused by employees who themselves screwed up rather than an attempt to extort cash. (I mean, stuff like that is how you get caught.)
And some of this occurred after receiving some pretty negative attention on their sales tactics:
Despite the LA Times investigation, Wells Fargo is still known for having aggressive sales goals for its employees. Wells Fargo’s executives highlight every quarter the bank’s so-called “cross sale ratio,” which is the number of products the bank sales to each of their individual customers. The ratio hovers around six, which means every customer of Wells Fargo has on average six different types of products with the bank.
And a rather high-profile complaint by somebody heading out the door:
There comes a point in organizations when the quest for quarterly profits and appeasement of Wall Street creates what I call organizational psychosis. Unfortunately, Wells Fargo has become organizationally psychotic. How do I know this? My 5 years and 2 months with Wells Fargo have witnessed nothing but disdain for our customers as our sales representatives are pushed to the limits of absolute futility under the guise of “best serving our customers”. Our “Culture of Caring” is unfortunately a lack of caring for the employees of the company which translates into a lack of caring for our customers. Despite the recent rash of bad press and investigations into our sales practices the sales goals of my own and other departments have been increased to a level which is near impossible. This will only further what is already a massive employee turn-over rate and result in a further lack of service and concern for our customer base. My time in sales has seen the disregard of our customers in the constant push of service people funneling customers to me for products they certainly don’t need with service that has not been performed. The good people I have had the pleasure to work with have been veterans that took care of their customers and cared to make sure they were taken care of. Despite metrics that could not be attained by most, at least a few of us did what was ethical and right in light of an organization steeped in poor service and willing to do anything to make sales goals.
Truth be told, the most high-pressure sales tactics I have received from is having to go through ads when trying to access my account on their website. I did receive calls from them for a while, but asked to be taken off the list and that request was respected.
We did have a somewhat bad experience with them when we took out a mortgage. In the final consideration, it came down between Discover and Wells Fargo. I went with Wells Fargo because their documentation requirements were somewhat lighter. They implied that this was in light of the fact that I already banked with them. But once I signed on with them, they asked for everything that Discover wanted, and dragged their feed and delayed the signing on the house.
Maybe it’s time to give Discover another look.
Meanwhile, the $185,000,000 is roughly three days of business at Wells Fargo, and the peons they are getting rid of were likely deadweight if they had to cheat to meet their management mandated targets.
And commerce rolls on…