CFPB Levees Record $100 Million Fine on Wells Fargo
The CFPB on Sept. 8 announced a $100 million fine against Wells Fargo for what the agency called “widespread unlawful sales practices.” The agency said the fine is the largest such penalty it has ever issued.
According to the CFPB, Wells Fargo employees secretly opened new accounts, into which they shifted funds from existing accounts without consumers’ knowledge or permission—often racking up fees and other charges. The employees’ actions were motivated by Wells Fargo compensation policies that rewarded employees for signing up existing clients for new accounts, according to the consent order. The illegally created new accounts were temporarily funded by transfers from existing accounts, enabling employees to meet new account creation sales targets, the agency said. The agency added that “thousands” of employees were involved in the activity, which dates back at least five years and resulted in the creation of more than 2 million deposit and credit card accounts that may not have been authorized by consumers, in violation of Dodd-Frank regulations barring unfair, deceptive and abusive acts.
“Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed,” CFPB Director Richard Cordray said in an announcement. “Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences.”
“Wells Fargo is committed to putting our customers’ interests first 100 percent of the time and we regret and take responsibility for any instances where customers may have received a product that they did not request,” the bank said in a statement.
Along with the $100 million fine, Wells Fargo is required to pay full refunds to all consumers affected by fees stemming from the illegal account creations and ensure proper sales practices are in place moving forward—including conducting an independent review of its procedures and reviewing its performance measures and sales goals. The bank also will pay an additional $35 million penalty to the Office of the Comptroller of the Currency and another $50 million to the City and County of Los Angeles.