Recently the CFPB fined Wells Fargo Bank $100 million for widespread unlawful sales practices. The Bank’s employees secretly opened accounts and shifted funds from consumers’ existing accounts into these new accounts without their knowledge or permission to do so, often racking up fees or other charges.
The Bank had compensation programs for its employees that encouraged them to sign up existing clients for deposit accounts, credit cards, debit cards, and online banking. According to today’s enforcement action, thousands of Wells Fargo employees illegally enrolled consumers in these products and services without their knowledge or consent in order to obtain financial compensation for meeting sales targets.
Bank employees temporarily funded newly-opened accounts by transferring funds from consumers’ existing accounts in order to obtain financial compensation for meeting sales targets. These illegal sales practices date back at least five years and include using consumer names and personal information to create hundreds of thousands of unauthorized deposit and credit card accounts.
The law prohibits these types of unfair and abusive practices.
Violations covered in today’s CFPB order include:
- Opening deposit accounts and transferring funds without authorization, sometimes resulting in insufficient funds fees.
- Applying for credit-card accounts without consumers’ knowledge or consent, leading to annual fees, as well as associated finance or interest charges and other late fees for some consumers.
- Issuing and activating debit cards, going so far as to create PINs, without consent.
- Creating phony email addresses to enroll consumers in online-banking services.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we have the authority to take action against institutions that violate consumer financial laws. Today’s order goes back to Jan. 1, 2011. Among the things the CFPB’s order requires of Wells Fargo:
- Pay full refunds to consumers.
- Ensure proper sales practices.
- Pay a $100 million fine.
Today’s penalty is the largest we have imposed. Other offices or agencies are also taking actions requiring Wells Fargo to pay an additional $85 million in penalties.
To read more about the details surrounding this enforcement action, read our press release.
This article by was distributed by the Personal Finance Syndication Network.