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Wells Fargo Created Millions of Fake Accounts, for Real Customers

By Casey C. Sullivan, Esq. on September 08, 2016 | Last updated on March 21, 2019

For years, employees at Wells Fargo crushed sales targets and pulled down bonuses by opening millions of fake accounts on behalf of the bank's real customers, all without those customers' knowledge or consent. Those fake banking and credit card accounts would then wrack up fees which customers would be stuck with. In total, more than 2 million fake accounts could have been created, according to Wells Fargo's own analysis.

The massive fraud was made public today, when the Consumer Financial Protection Bureau announced it was fining the bank $100 million, its largest fine ever. And that's just the start. Wells Fargo has also agreed to pay $35 million to the Office of the Comptroller of the Currency, and $50 million to Los Angeles, for a total of $185 million in fines. The company will also payout "full restitution to all victims," on top of the fines.

A Few Thousand Bad Apples

The scheme worked something like this. In order to meet sales goals or qualify for bonuses, Wells Fargo employees would open up deposit or credit card accounts in the names of existing customers. Those accounts would help employees meet their sales goes and they would also generate fees for insufficient funds, overdrafts, and the like. The bank estimates that 565,000 fraudulent credit card accounts and 1.5 million bank accounts were created this way.

The news doesn't come out of the blue, however. In May of 2015, officials in Los Angeles and the Office of the Comptroller of the Currency sued Wells Fargo, alleging that the company pushed customers into account types that they did not need, in order to generate fees. The suit came two years after the Los Angeles Times ran an exposé on the bank's aggressive sales tactics. "To meet quotas, employees have opened unneeded accounts for customers, ordered credit cards without customers' permission and forged client signatures on paperwork," the L.A. Times' E. Scott Reckard wrote. "Some employees begged family members to open ghost accounts."

The bank said it was "cross selling" at the time. But meanwhile, it had fired more than 5,300 thousand employees for creating fraudulent accounts since 2011, according to Reuters.

Not the End of the Story

In addition to the government fees, Wells has already refunded $2.5 million to customers, according to the New York Times. It's also bringing on an independent consultant to look at its procedures.

And consumer litigation is sure to follow. In the few hours since the fines were announced, a class action law firm has already launched a website for "consumers who believe Wells Fargo opened a bank account, credit card or line of credit in their name without their permission."

"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.

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