Federal regulators revealed an investigation has uncovered a massive fraud scheme at Wells Fargo, whose victims were the bank’s own customers. Officials from the Consumer Financial Protection Bureau (CFPB) said Wells Fargo employees secretly created millions of unauthorized bank and credit card accounts in customers’ names, without their permission or their knowledge, beginning as early as 2011.
As a result of the fraud, CFPB officials say, bank employees were able to collect fees and earn bonuses for creating new accounts.
An investigation by Wells Fargo auditors into the fraud revealed employees opened approximately 1.5 million unauthorized accounts, including enrolling customers in services they did not approve and even applying for credit card accounts using customer information.
“Millions of consumers entrusted their hard-earned money and confidential information to Wells Fargo Bank, which then breached that trust by opening unauthorized accounts just so the bank could generate more fees for itself,” said W. Daniel “Dee” Miles, head of Beasley Allen’s Consumer Fraud section. “This is not only despicable, but corporate misconduct at its worst.”
According to the CFPB, Wells Fargo employees would often perpetrate the fraud by moving money from existing customer accounts into the new accounts and services. As a result, customers also paid penalties for insufficient funds and overdrafts because money that should have been in their account was not.
At least 5,300 Wells Fargo employees have been fired as a result of the misconduct.
Wells Fargo will pay a penalty of $185 million to the CFPB and has agreed to set aside $5 million to pay restitution to customers. Wells Fargo has an estimated worth of $250 billion.
The CFPB declined to reveal how it uncovered the fraudulent scheme.
Beasley Allen is prepared to file a class action lawsuit on behalf of bank customers who suffered financial losses as a result of this fraud. For more information, contact Dee Miles.