CFPB fines Wells Fargo
Last week, Wells Fargo was slapped with the largest fine ever by the CFPB (Consumer Financial Protection Bureau). This is the second time in one month that Wells Fargo has been fined. Earlier, the bank was asked to pay $3.6 million due to student loan issues. Last week, the CFPB asked Wells Fargo (WFC) to pay $185 million as a fine for fraudulent accounts opened by employees to meet sales targets. Wells Fargo shares have fallen ~6% since the news of this scam broke out. Year-to-date, shares of the bank (XLF) are down 14.5%. They have underperformed peers such as Citigroup (C), Bank of America (BAC), and JPMorgan Chase (JPM)
Approximately 5,300 Wells Fargo employees opened two million fraudulent accounts for customers who didn’t authorize them. They also applied for 565,000 unauthorized credit cards. In turn, Wells Fargo charged $1.5 million in fees for these fraudulent accounts that led to bonuses and incentives for the bank’s employees. Wells Fargo customers noticed the deception when unexpected fees were charged to them or they received debit or credit cards without requesting them. Most of these accounts went unnoticed as employees closed them shortly after receiving the bonuses tied to them. Wells Fargo agreed to refund about $2.6 million in fees that may have been inappropriately charged. Wells Fargo also terminated the employees involved in the scam. “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.