Wells Fargo Expands Settlement Scope in Phony Accounts Litigation

Employees boosted sales figures by covertly opening and funding accounts without customers’ approval.

Wells Fargo & Co. (WFC), one of the U.S. largest banks, said it would expand the financial terms of a class action settlement related to claims that the lender’s employees secretly opened millions of unauthorized accounts for their customers in order to meet aggressive sales goals.

The London Summit 2017 is coming, get involved!

Join the iFX EXPO Asia and discover your gateway to the Asian Markets

The embattled bank will add $32 million to the previous agreement for a total settlement of $142 million, Reuters reports. The scope of the settlement is being expanded to include customers who had unauthorized accounts opened in their name as early as May 2002. The previous agreement only went back to 2009.

“We made a number of mistakes, there’s no question about it. We’re focused on fixing what was broken, making sure that we’re making things right by our customers,” Wells Fargo CEO Tim Sloan told CNN this week.

Suggested articles

Tradefora Completes Integration with Serenity EscrowGo to article >>

San Francisco-based banking giant said the revised settlement, which is subject to court approval, will cover all customers claiming that its employees opened roughly two million bank accounts and applied for 565,000 credit cards without customers’ knowledge or consent. In some cases, bank employees created fake email addresses to sign up customers for online banking services, accumulating late fees on accounts they never even knew they had.

The phony accounts scandal has roiled the third-largest US lender by assets, leading to the resignation of its former Chief Executive Officer John Stumpf who had decided to leave the bank with immediate effect earlier in October 2016.

The Consumer Financial Protection Bureau (CSFB) blamed Wells Fargo’s aggressive sales tactics. The federal consumer watchdog said employees at the world’s most valuable bank, which serves around 40 million retail customers, had been motivated to open the unauthorized accounts by compensation policies that rewarded them for drumming up new business.

The lender said it conducted a comprehensive review of its sales practices five years ago and it had taken “disciplinary actions, including terminations of managers and team members who acted counter to our values”.

About 5,300 Wells Fargo workers, representing roughly 1% of the total workforce, have lost their jobs over their involvement with the unauthorized accounts.

Got a news tip? Let Us Know