To add to the list of infractions, Wells Fargo was just fined $185 million dollars in civil penalties and fired over 5,000 employees after they opened millions of accounts under customers’ names without their permissions.
Wells Fargo agreed to pay $100 million in restitution to the Consumer Financial Protection Bureau for victims, $35 million in penalties to the Office of the Comptroller of the Currency and $50 million to the city and county of Los Angeles.
This scandal, which unfolded over this past week, has many customers upset over the breach of trust, but more importantly, the financial effect this had on victims’ pockets and credit scores.
In February, Wells Fargo paid $1.2 billion for Federal Housing Administration (FHA) insurance claims between 2001 and 2010, to settle complaints from the Dept. of Justice, the U.S. Attorney’s Office for the Southern District of New York, the U.S. Attorney’s Office for the Northern District of California and Housing and Urban Development.
Neither of these were the first of their infractions, nor does it seem as if it will be the last.
What this latest infraction suggests is that there seems to be a culture within the institution that foregoes ethics in the name of profit.
“Employees opened up over 1.5 million deposit accounts that may not have been authorized,” according to current reports from CNN Money.
Wells Fargo hired an unnamed analyst that said employees transferred funds from customers’ existing accounts to the newly created ones, without the customers’ knowledge or consent. It was also found that employees of the institution submitted 564,443 credit card account applications, also without customer knowledge and consent.
Wells Fargo is the biggest U.S. bank by stock market value, but their boldness is concerning, especially the rate at which they get caught in scandals. If the scandals continue, it’s questionable how they’ll continue to operate as a company.
To make matters worse, customers would get charged late fees among other fees from these accounts they didn’t sign off on.
No one is sure how widespread the scandal goes, a scandal of this magnitude does not go on without some kind of backing from management.
It also shows that Wells Fargo has toxic incentive strategies and doesn’t seem to be impeded by financial consequences.
Since information on the scandal is still being released, it has people in the industry asking questions about the culture and sloppiness of the bank.
With this being their fifth problem, they definitely are not the only bank that has been caught taking advantage of customers before. But one thing is for sure: Wells Fargo can’t afford another scandal.
email: kenneth.thomas@ubspectrum.com
Twitter: @KenUBspec
Kenneth Kashif Thomas is the senior features editor and can be reached at features@ubspectrum.com and you can follow him on twitter @KenUBSpec
