A lawsuit by the city of Los Angeles claims Wells Fargo Bank employees opened unauthorized accounts for customers, sticking them with bogus fees and damaging their credit to meet rigid sales quotas.
The civil complaint filed Monday, May 4 in state court was by City Attorney Mike Feuer, who says the largest California-based bank encouraged its employees to “engage in unfair, unlawful and fraudulent conduct”—including opening customer accounts and issuing credit cards without authorization, then failing to inform consumers of the alleged misuse of their personal information.
“Consumers should be entitled to expect that major financial institutions will treat them fairly,” said Feuer in a statement. “Our lawsuit alleges that in Wells Fargo’s push for growth the bank often elevated profit over its customers’ legal rights.”
With the company’s persistent, high-pressure sales culture, some employees went so far as to raid client accounts for money to open additional accounts, the suit alleges. Wells Fargo’s business model “imposed unrealistic sales quotas that, among other things, have driven employees to engage in unlawful activity including opening fee-generating customer accounts and adding unwanted secondary accounts as well as unauthorized fees to primary accounts without permission.”
The alleged practices, the complaint says, “have led to significant hardship and financial loss to consumers.”
“The result is that Wells Fargo has generated a virtual fee-generating machine, through which its customers are harmed, its employees take the blame, and Wells Fargo reaps the profit.”
The corporate bank has blamed problems on a few rogue employees who the bank has appropriately disciplined or fired. The city’s investigation, however, found only token efforts by Wells to prevent customer abuses.
“On the rare occasions when Wells Fargo did take action against its employees for unethical sales conduct, Wells Fargo further victimized its customers by failing to inform them of the breaches, refund fees they were owed, or otherwise remedy the injuries that Wells Fargo and its bankers have caused,” according to the suit.
The complaint was filed under an unfair-business-practices law that permits attorneys representing large California cities to seek redress for customers in the state. It contends that Wells Fargo employees violated state and federal laws by misusing confidential information, and by failing to notify customers when their personal data were breached.
“We’re very concerned that consumers be told whenever their information is used for unauthorized purposes,” Feuer said.
The derogatory notes on credit reports for unpaid fees have also caused some customers to purchase identity theft protection. Failure to properly refund these unauthorized fees and not protect their consumers are main points on their lawsuit.
Wells Fargo has long boasted to investors of its unrivaled success in selling additional accounts and services to customers. The bank said it would “vigorously defend itself” against the allegations.
“Wells Fargo’s culture is focused on the best interests of its customers and creating a supportive, caring and ethical environment for our team members,” the bank said. “This includes training, audits and processes that work together to support our Vision & Values and our commitment to customers receiving only the products and services they need and will benefit from.”
The City Attorney’s lawsuit is seeking an injunction against Wells Fargo to prohibit the company and its employees from engaging in the alleged practices relating to the opening and maintaining of bank accounts. It also seeks civil penalties of up to $2,500 for every violation and restitution for customers who were harmed. If the suit succeeds in LA County Superior Court, it would apply to all residents of the county and even to people outside its boundaries, Feuer said.
The bank made no comment on the alleged stories of multiple unauthorized accounts and improper fees included in the suit.
Wells Fargo customers finding discrepancies can call the City Attorney’s dedicated hotline: 213-978-3393
