Wells Fargo Bank has been ordered to pay a $100m fine by the US Consumer Financial Protection Bureau (CFPB) for the widespread illegal sales practice of secretly opening unauthorised deposit and credit card accounts.
Wells Fargo neither admitted nor denied the allegations; however, the bank agreed to pay the fine and submit to a consent order to settle civil claims brought by the US Office of the Comptroller of the Currency (OCC), the CFPB and the city attorney.
The bank will pay full compensation to all victims, an additional $35m penalty to the OCC, and another $50m to the City and County of Los Angeles.
During the investigation, the financial watchdog found that bank incentives to boost sales figures spurred employees to secretly open deposit and credit card accounts and funded them by transferring money from consumers’ authorized accounts without their knowledge, often racking up fees or other charges.
Further, the probe revealed that Wells Fargo staff applied for almost 565,000 credit card accounts that may not have been authorized by consumers. Many consumers were charged annual fees, as well as associated finance or interest charges and other fees on those unauthorised credit cards.
CFPB Director Richard Cordray said: “Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses.
“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.”