Date
25 March 2017
Wells Fargo customers were pushed into costly financial products that they did not need or even request, according to prosecutors. Photo: AFP
Wells Fargo customers were pushed into costly financial products that they did not need or even request, according to prosecutors. Photo: AFP

Wells Fargo will pay US$190 mln to settle customer fraud case

Wells Fargo, the largest US bank by market capitalization, will pay US$185 million in penalties and US$5 million to customers after regulators said it pushed clients into fee-generating accounts they never requested.

The Consumer Financial Protection Bureau (CFPB) will receive US$100 million of the total penalties, the largest fine ever levied by the federal agency, Reuters reports.

“We regret and take responsibility for any instances where customers may have received a product that they did not request,” the bank said of a settlement reached on Thursday with California prosecutors and federal regulators.

“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,” CFPB director Richard Cordray was quoted as saying.

Los Angeles officials and the Office of the Comptroller of the Currency were also party to the settlement.

In a complaint filed in May 2015, California prosecutors alleged that Wells Fargo pushed customers into costly financial products that they did not need or even request.

Bank employees were told that the average customer tapped six financial tools but that they should push households to use eight products, according to the complaint.

The bank opened more than 2 million deposit and credit card accounts that may not have been authorized, the CFPB said.

Wells Fargo spokeswoman Mary Eshet said the bank fired 5,300 employees over “inappropriate sales conduct”.

The firings took place over a five-year period, Eshet said, adding that the bank has 100,000 employees in its branches.

Wells Fargo regularly releases numbers about how many products it sells to customers, a practice it calls “cross-sell”.

Its wealth and investment management unit, for example, sold 10.55 products per retail banking household in November 2015, up from 10.49 a year earlier, according to the bank’s annual 10-K financial filing.

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