Wells Fargo will pay $185m in a settlement over illegal sales practices that included the opening of unauthorized duplicate accounts and credit cards by employees in order to meet sales quotas, it was announced on Thursday. The settlement includes a $100m fine paid to the Consumer Financial Protection Bureau (CFPB) – the largest ever levied by the five-year-old bureau – a $35m penalty paid to the Office of the Comptroller of the Currency (OCC) and a $50m penalty paid to the City and County of Los Angeles. “Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” said CFPB director Richard Cordray. “Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed.” In a statement, Wells Fargo said it “reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us”. The illegal practices were exposed in a lawsuit filed by David Douglas, a long-term Wells Fargo customer. In 2013, the Los Angeles Times reported that at least 30 employees had been fired for opening duplicate accounts without the knowledge of customers. The Guardian subsequently found that sales quotas that employees said led to such accounts being opened were still in place. In 2013, a personal banker working at Wells Fargo was expected to sell 20 products a day. According to Khalid Taha, a former personal banker at Wells Fargo, in 2014 that number dropped to 15 a day. Such products included overdraft insurance, travel insurance, new accounts and credit cards. Speaking to the Guardian in 2015, Taha said the 15-product-a-day quota was “unreasonable” and said every interaction with a customer, many of whom were current users of the bank who just want to get a statement, check their balance or make a payment, took an hour. “You don’t sell more than a product per customer,” Taha said. “You can, but it’s not that easy. Most of our customers are current customers. They already have several products.” At the time Taha spoke to the Guardian he was still an employee of Wells Fargo. Now a member of the Committee for Better Banks Los Angeles, he said on Thursday: “The Wells Fargo sanctions are a long overdue victory for the front-line workers who have been standing together to fight Wells Fargo’s predatory sales practices in Los Angeles for years.” In May 2015, the Los Angeles city attorney filed a lawsuit regarding the practices; by fall of that year the San Francisco Federal Reserve Bank and the federal OCC had begun investigations. On a call with reporters on Thursday, regulators said a review of Wells Fargo practices found that about 1.5 million deposit accounts and 565,000 credit cards could have been opened without customers’ permission. About 5,300 employees have been fired during the investigations, the Wall Street Journal reported. The CFPB, which was established under the Dodd-Frank reform act, took action against Wells Fargo for violating consumer financial laws, issuing an order requiring the bank to refund any consumers who paid any fees and charges on unauthorized accounts, hire a consultant to review its sales practices, and pay the $100m fine. Cordray said: “Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences.” In its statement, Wells Fargo said: “Wells Fargo is committed to putting our customers’ interests first 100% 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 that as a result of an independent review, customers had already been refunded $2.6m in unwarranted fees. “Accounts refunded represented a fraction of 1% of the accounts reviewed, and refunds averaged $25,” the statement said. Taha added: “When I worked at Wells Fargo, I faced the threat of being fired if I didn’t meet their unreasonable sales quotes every day, and it’s high time that Wells Fargo pays for preying on consumers’ financial livelihoods. “But sanctions on one bank are not enough – we need to crack down on the hostile work conditions and predatory sales metrics that hurt underpaid bank workers like me and our consumers alike.”
Wells Fargo is set to pay $ 185 m for its illegal accounting practices , exposed during a lawsuit by an established Wells Fargo customer in 2013 . These practices include the opening of duplicate accounts and credit cards agreements by its employees to meet high quotas for payments in 2013 . The fine includes $ 100 m to be paid to the Consumer Financial Protection fund ( CFPB ) , the largest of its kind to be paid ; $ 35 m to be paid to the Comptroller of the Currency ( OCC ) ; and $ 100 m to be paid to the treasurer and County of Los Angeles .