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Wells Fargo sales incentives lead to $185M in CMPs

09/08/2016
Fine Amount: 
$185 million and restitution
Penalty Type: 
Issued by: 

The Consumer Financial Protection Bureau (CFPB), the Office of the Comptroller of the Currency (OCC) and the Attorney for the City and County of Los Angeles, Califorrnia (LA), have announced that they have collectively ordered Well Fargo Bank, N.A., to make restitution to consumers and pay $185 million in civil money penalties for unsafe and unsound sales practices (OCC) and unfair, deceptive or abusive acts or practices (CFPB and LA) in connection with an employee sales incentive program that was inadequately monitored or controlled. According to the CFPB, Wells Fargo employees —

  • opened roughly 1.5 million deposit accounts that may not have been authorized by consumers. Employees then transferred funds from consumers’ authorized accounts to temporarily fund the new, unauthorized accounts. This widespread practice gave the employees credit for opening the new accounts, allowing them to earn additional compensation and to meet the bank’s sales goals. Consumers, in turn, were sometimes harmed because the bank charged them for insufficient funds or overdraft fees because the money was not in their original accounts.
  • applied for roughly 565,000 credit card accounts that may not have been authorized by consumers. On those unauthorized credit cards, many consumers incurred annual fees, as well as associated finance or interest charges and other fees.
  • requested and issued debit cards without consumers’ knowledge or consent, going so far as to create PINs without telling consumers.
  • created phony email addresses not belonging to consumers to enroll them in online-banking services without their knowledge or consent.

The bank has been ordered to:

  • pay full refunds to consumers who incurred monthly maintenance fees, NSF fees, overdraft charges and other fees they paid because of the creation of the unauthorized accounts (expected $2.5 million total)
  • ensure proper sales practices by engaging an independent consultant for a review of current practices and possibly conducting ethical-sales training.

The bank will pay $100 million to the CFPB, $50 million to the City and Country of Los Angeles, and $35 million to the U.S. Treasury via the OCC.

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