Wells Fargo Fake Account Scandal Grows
Wells Fargo's announced today that it uncovered 1.4 million additional fake accounts created by some of its employees. The newly uncovered accounts bring the total to 3.5 million unauthorized accounts. Los Angeles City Attorney Mike Feuer said that his office would work to make sure any new victims receive restitution.
Feuer's office last year settled a lawsuit brought against the bank after some of its employees created what was believed at the time to be 2.1 million unauthorized accounts as a way to meet aggressive sales goals set by management.
"It is mind-boggling that it took Wells Fargo this long to identify the many more account holders whose lives may have been disrupted because of fake accounts," L.A. City Attorney Mike Feuer said.
The settlement resulted in $50 million in civil penalties for the city of Los Angeles and $135 million for two federal agencies, and Wells Fargo was ordered to provide restitution to affected customers.
"It is mind-boggling that it took Wells Fargo this long to identify the many more account holders whose lives may have been disrupted because of fake accounts," Feuer said. "Our office, working across the country with two key federal agencies, are very proud to have assured that every one of the account holders, including those identified just today by Wells Fargo, will receive the restitution to which they are entitled. That's very important."
The settlement stemmed from a lawsuit Feuer's office filed against Wells Fargo after the Los Angeles Times reported that fake accounts were created without customers' knowledge and caused them to rack up bank fees.
The fake accounts were set up by bank employees to achieve sales goals and reap financial incentive rewards, and the bank fired about 5,300 employees as the result of the allegations, according to the Consumer Financial Protections Bureau.
In April, the Wells Fargo Board of Directors clawed back $75 million in compensation from two ex-executives it blamed for much of the company's sales scandal.
Feuer said anyone who believes they have been the victim of a fake account should "reach out to our office with any questions about the restitution to which they are entitled."
The additional fake accounts were discovered by an analysis that went back to January 2009, beyond the original May 2011 to mid-2015 period.
In a statement regarding the newly discovered fake accounts, Wells Fargo CEO Tim Sloan said, "We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank."
