Banking giant Wells Fargo has been slapped with $185 million in fines for illegal banking practices that regulators found have been happening since 2011. The fines included the largest ever penalty ($100 million) paid to the Consumer Financial Protection Bureau. These illegal practices were so widespread that roughly 5,000 employees have been fired for creating millions of phony accounts in customers’ names. And it’s no wonder why. An unbelievable 1.5 million fake bank accounts — which accumulated late fees — were opened by employees. In addition, 565,000 credit card accounts were in the mix without customers’ knowledge.
All of this has taken place, presumably, due to lack of oversight and an incentive plan that granted bonuses for “drumming up new business.” Wells Fargo told CNN Money that the company figured out (a few years ago) how thousands of employees signed up customers for online banking through phony email addresses. This may have been part of the reason why the company decided to hire an independent consultant to look into the situation. The regulators probably had plenty to do with this too.
The New York Times adds that the $185 million fine isn’t the only blow to the company. Wells Fargo also refunded $2.5 million to customers, and the damage to consumer confidence could have immeasurable consequences. The company has issued a statement: “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.” It sounds like these customers never even received these products, but surely, this massive fine will prevent the practice from happening again in the future.