For years, thousands of Wells Fargo employees opened unauthorized checking accounts and credit cards—and were in many cases rewarded for using the faked customer growth to hit internal cross-selling targets. Regulators, calling the behavior a severe and widespread violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, today fined the company $185 million and are requiring it to pay restitution to victims.
The violations may have affected more than 2 million of Wells Fargo’s 40 million customers between 2011 and 2015, some of whom paid fees on accounts they did not know existed.
“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,” Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), said in a statement.
His agency fined Wells Fargo $100 million, the largest penalty it has ever imposed. In addition, Wells Fargo will pay $50 million to the City and County of Los Angeles and $35 million to the Office of the Comptroller of the Currency.
The Wall Street Journal first reported that regulators were investigating Wells Fargo’s sales culture in November.
By market value, Wells Fargo is the largest U.S. bank.
[Photo: Flickr user Ron Cogswell]