Wells Fargo N.A. was recently ordered to pay over $100 million by the CFPB (Consumer Financial Protection Board). The bank admitted wrongdoing in opening fraudulent bank products for unsuspecting customers. The product ranged from credit cards to deposit accounts. Wells Fargo released a statement in which they spoke of sales goals and financial incentives being the primary driver that caused their employees to act unethically. These fraudulent accounts boosted employee sales numbers but also caused unnecessary fees to be charged to bank clients. The bank concluded that close to 2 million credit card and bank accounts might have been opened fraudulently.
The CFPB ordered Wells Fargo to make full restitution to all the customer affected and to pay a $100-million-dollar fine which goes into the CFPB Civil Penalty Fund. The fines the bank has to pay does not stop there. Wells must also hand over $35 million dollars to the Office of the Comptroller of Currency and another $50 million to the city and county of Los Angeles.
This news comes after Wells Fargo has spent years touting itself on its ability to cross-sell products to existing clients. Cross-selling is a common and excepted business practice which can be extremely beneficial for customers. The problem arose as the Bank started to offer monetary benefits associated with higher cross-selling sales goals.
Since paying these fines and making full retribution to the clients affected, Wells Fargo has launched an advertising campaign to try to regain some of its lost credibility in the consumer marketplace.