Wells Fargo Bank, one of the nation's largest banks, has been hit with $185 million in civil penalties for secretly opening millions of unauthorized deposit and credit card accounts that harmed customers, federal and state officials said Thursday.

Employees of Wells Fargo (WFC) boosted sales figures by covertly opening the accounts and funding them by transferring money from customers' authorized accounts without permission, the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency and Los Angeles city officials said.

An analysis by the San Francisco-headquartered bank found that its employees opened more than two million deposit and credit card accounts that may not have been authorized by consumers, the officials said. Many of the transfers ran up fees or other charges for the customers, even as they helped employees make incentive goals.

The findings stem in part from a Los Angeles County Superior Court lawsuit filed last year in which Los Angeles City Attorney Mike Feuer accused the bank of violating California unfair competition laws.

The civil action charged that Wells Fargo Bank and its parent, Wells Fargo & Co., "victimized their customers by using pernicious and often illegal sales tactics to maintain high levels of sales of their banking and financial products."

"Wells Fargo built an incentive-compensation program that made it possible for its employees to pursue underhanded sales practices, and it appears that the bank did not monitor the program carefully," said CFPB Director Richard Cordray. He added that thousands of bank employees "misused consumer names and personal information to create new checking and credit card accounts to inflate their sales figures to meet their sales targets and claim higher bonuses."

The bank agreed to pay full restitution to all victims and a $100 million fine to the Consumer Financial Protection Bureau's civil penalty fund — the largest in the regulator's five-year operating history. Wells Fargo will pay a separate $35 million penalty to the Office of the Comptroller of the Currency, and an additional $50 million to the city and county of Los Angeles.

The settlements, which the bank said it had made provisions for as of June 30, include an additional $5 million in customer remediation.

Additionally, Wells Fargo said it terminated approximately 5,300 employees and managers over a five-year period for their involvement with the unauthorized accounts. The firings, representing roughly 1% of the total workforce during that time, "reflect our commitment to monitoring and addressing any inappropriate sales conduct," the bank said.

The bank agreed to the filing of a CFPB consent order without admitting or denying legal conclusions reached by federal investigators.

“Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us," the bank said in a statement. "Wells Fargo is committed to putting our customers’ interests first 100% of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request."

The bank said a review by a third-party consultant resulted in $2.6 million in refunds to customers for any fees associated with products the account holders "may not have requested." Accounts refunded represented a fraction of one percent of the accounts reviewed, and refunds averaged $25, Wells Fargo said.

Col. Dash wrote:
Well it was the low level employees doing the fraud so it makes sense they were the ones fired. Is there proof that anyone higher than these employees knew about it? Assuming their immediate managers were in on it and part of that fired number, it would not have benefitted any execs to get in on it since the incentive money was coming out of their bottom line.

Col. Dash wrote:
Well it was the low level employees doing the fraud so it makes sense they were the ones fired. Is there proof that anyone higher than these employees knew about it? Assuming their immediate managers were in on it and part of that fired number, it would not have benefitted any execs to get in on it since the incentive money was coming out of their bottom line.

Col. Dash wrote:
Well it was the low level employees doing the fraud so it makes sense they were the ones fired. Is there proof that anyone higher than these employees knew about it? Assuming their immediate managers were in on it and part of that fired number, it would not have benefitted any execs to get in on it since the incentive money was coming out of their bottom line.

Wells Fargo & Co. is the nation's leader in selling add-on services to its customers. The giant San Francisco bank brags in earnings reports of its prowess in "cross-selling" financial products such as checking and savings accounts, credit cards, mortgages and wealth management. In addition to generating fees and profits, those services keep customers tied to the bank and less likely to jump to competitors.

The bank expects staffers to sell at least four financial products to 80% of their customers, employees said. But top Wells Fargo executives exhort employees to shoot for the "Great 8" — an average of eight financial products per household.

The tracking starts each morning. Managers are asked not only to meet but to exceed daily quotas passed down by regional bosses. Branch managers are expected to commit to 120% of the daily quotas, according to the former Pacific Northwest branch manager, who said results were reviewed at day's end on a conference call with managers from across the region.

"If you do not make your goal, you are severely chastised and embarrassed in front of 60-plus managers in your area by the community banking president," the former branch manager said.

Use the right metric.
The most common metric for assessing cross-selling campaigns is the average number of different products (or product categories) sold to each customer. Wells Fargo publishes this information in its annual reports and cites its desired cross-buy level—the number of products it wants each of its customers to own—as a key strategic goal. Like the financial services firm discussed earlier, companies commonly use this metric to create employee incentives.

 Vaktathi wrote:

Col. Dash wrote:
Well it was the low level employees doing the fraud so it makes sense they were the ones fired. Is there proof that anyone higher than these employees knew about it? Assuming their immediate managers were in on it and part of that fired number, it would not have benefitted any execs to get in on it since the incentive money was coming out of their bottom line.

If you have 5300 employees engaging in that kind of behavior, the kind that you terminate them for, and upper management is completely unaware, they're criminally negligent.

Management designed the incentives that drove this behavior. Management is reponsible for overseeing employees and their actions. Management is responsible for those actions.

It's one thing when you have just a couple dudes doing something shady, or specific branches, stuff happens and people get that. If you're firing over five thousand people however, management was either complicit or inexcusably negligent. Either way, executive management should be facing extreme consequences.

 Ensis Ferrae wrote:
Big Shady bank doing big shady bank things.... And of course the wrong people are being punished for it.

I'm really not surprised Wells Fargo was doing this, they were shady as feth back when I actually had an account with them.

 Ouze wrote:
I assume not even a single person did even a single day of jail time, right?

 BigWaaagh wrote:
This.


http://www.msn.com/en-us/money/companies/wells-fargo-exec-who-headed-phony-accounts-unit-collected-dollar125-million/ar-AAiN0iA?li=BBnb7Kz&ocid=ASUDHP

 Easy E wrote:
Creepy Clowns and Twin Towers Cos-players get more discussion than actual bank fraud.

Wow.

Troy wrote:
What is to discuss?

 Easy E wrote:
Creepy Clowns and Twin Towers Cos-players get more discussion than actual bank fraud.

Wow.

 Spinner wrote:

 Easy E wrote:
Creepy Clowns and Twin Towers Cos-players get more discussion than actual bank fraud.

Wow.

Possible Pennywise sightings don't happen on a regular basis.

:(

 Spinner wrote:
...on second thought, that's a fairly easily misinterpretable emoticon.

I'd like it on the record that I in no way endorse shapeshifting cosmic beasts that devour children, clown-shaped or otherwise.

 Easy E wrote:

 Ouze wrote:
I assume not even a single person did even a single day of jail time, right?

You are correct.


Automatically Appended Next Post:

 BigWaaagh wrote:
This.


http://www.msn.com/en-us/money/companies/wells-fargo-exec-who-headed-phony-accounts-unit-collected-dollar125-million/ar-AAiN0iA?li=BBnb7Kz&ocid=ASUDHP

Her pay is 126 Million, the fine was 185 million. She is not losing a penny of her pay to the fine. Wow. That will teach those execs to act responsibly!

 Frazzled wrote:
Of course there won't be.

 BigWaaagh wrote:

 Frazzled wrote:
Of course there won't be.

Gentlemen's bet it happens, what do you say? No money, or the like involved, as I don't want any weirdness with "gambling" that could get Dakka in trouble, but I'm betting WFC recovers some of that compensation. With all the flak surrounding this issue, I wouldn't be surprised if Tolstedt "voluntarily" antes up herself.

"Here's what really gets me about this, Mr. Stumpf. If one of your tellers took a handful of $20 bills out of the crash drawer, they'd probably be looking at criminal charges for theft. They could end up in prison.

"But you squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket.

"And when it all blew up, you kept your job, you kept your multi-multimillion-dollar bonuses, and you went on television to blame thousands of $12-an-hour employees who were just trying to meet cross-sell quotas that made you rich.

"This is about accountability. You should resign. You should give back the money that you took while this scam was going on, and you should be criminally investigated by both the Department of Justice and the Securities and Exchange Commission. This just isn't right."