Wells Fargo was fined a total of $185 million by California and federal regulators Thursday for allegedly opening millions of unauthorized accounts for customers in order to meet its aggressive sales goals.
Employees, since 2011, had created millions of fake bank and credit card accounts without the customer’s knowledge. This resulted in the bank earning unwarranted fees not to mention employees boosting their sales figures and consequently earning higher pay checks.
Wells Fargo confirmed to CNNMoney that it had fired as many as 5,300 employees in the last few years in relation to these practices.
The bank now has to pay $100 million to the federal agency Consumer Financial Protection Bureau (CFPB), $35 million to the Office of the Comptroller of the Currency and $50 million to the City and County of Los Angeles. The San Francisco-based bank also has to pay $5 million as compensation to affected customers.
“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” CFPB Director Richard Cordray said in a statement.
“Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed. Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences,” he added.
Los Angeles City Attorney Mike Feuer reportedly described Wells Fargo’s behavior as “outrageous” and a “major breach of trust.”
In a statement, the bank said, “Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us… We regret and take responsibility for any instances where customers may have received a product that they did not request.”
A consulting firm hired by Wells Fargo found that employees opened nearly 1.5 million unauthorized deposit accounts and submitted applications for 565,443 credit card accounts. Employees also allegedly set up fake email accounts and PIN numbers to register customers to the bank’s online banking services. Money was transferred to these new accounts from the customers’ accounts without authorization.