Summary: Wells Fargo admitted that 3.5 million fake accounts were created by employees trying to meet unrealistic sales goals.
The number of fake accounts Wells Fargo employees created in an elaborate scheme is higher than originally reported. According to Fox News, the scandal may have affected 3.5 million customers instead of the 2.1 million originally reported.
“We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank,” Wells Fargo CEO Tim Sloan said.
On Thursday, Wells Fargo disclosed the finding, and it said that it will provide additional millions to pay back the customers affected.
In September of last year, Wells Fargo acknowledged that its employees, faced with high sales quotas, opened millions of unauthorized accounts using real people’s data. The scheme began in 2009 and lasted for years, and some customers were charged fees in association with the fake accounts. The total of these fees meant that Wells Fargo raked in millions.
The government filed a lawsuit against Wells Fargo, and the bank subsequently changed its corporate structure and removed sales goals. The former CEO was ousted after the scandal and other executives in power at the time have also left the company.
A class-action lawsuit was settled due to the fake account scam, and Wells Fargo agreed to pay $142 million. They also have already paid $185 million in fines from the government.
According to Fox News, Wells Fargo hired a third party investigator, who uncovered 1.4 million additional fake accounts and 190,000 of those accounts accrued fees. The bank said that it will pay back $2.8 million in refunds and credits in addition to the $3.3 million it had already pledged to give back to affected customers.
Additionally, Wells Fargo said that 528,000 customers were enrolled in online bill pay without signing up for it, and these customers will receive refunds that total to almost $910,000.
Keefe, Bruyette & Woods told CNBC that the disclosure of the fake accounts will help the bank put the scandal behind it.
“The fact that the company has completed its comprehensive third-party account review and has communicated the finality of its customer remediation plans is a positive in our view,” KBW analyst Brian Kleinhanzl said. “The retail sales practice scandal settlement was announced nearly a year ago, and at this stage we now expect the trickle of new information to slow considerably.”
So far, Wells Fargo hasn’t seen the upside to its announcement. Since its disclosure, the bank’s shares fell by 0.8 percent, marking an already terrible year caused by its legal woes and bad reputation.
Earlier this month, the bank pledged to disclose all of its legal woes to regain the public’s trust.
“The disclosures included in our filing [Friday] reflect the company’s continued commitment to transparency. Our top priority is to rebuild trust, and this work includes an ongoing effort to identify and address other areas or instances where customers may have experienced financial harm. We remain focused on making things right for our customers, team members, community partners and shareholders and on building a better Wells Fargo,” the bank said in early August.
- Wells Fargo Promises to Disclose All Its Legal Woes
- Wells Fargo Charging Customers with Unwanted Auto Insurance
- Wells Fargo Allegedly Steered Blacks and Latinos to Costlier Mortgages
- Wells Fargo Employees Caught Creating Millions of Fake Accounts to Collect Fees
- Wells Fargo Settles Fake Account Class-Action Lawsuit