Wells Fargo, the American banking and financial services giant, received a $185 million fine and a $100 million penalty after employees were caught using 2 million ghost accounts to commit credit card fraud.
From as early as 2011, some 1.5 million accounts had applied for 565,000 unauthorized credit cards, investigators found. Not only did the perpetrators open credit cards in the name of Wells Fargo clients, but they also created emails for online banking. Following an investigation, Wells Fargo has fired 5,300 employees for creating “phony PIN numbers and fake email addresses to enroll customers in online banking services,” according to the Consumer Financial Protection Bureau.
“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,” said CFPB Director Richard Cordray. “Unchecked incentives can lead to serious consumer harm, and that is what happened here.”
The massive fraud involved circulating funds from genuine accounts into new ones, so Wells Fargo clients ended up charged “for insufficient funds or overdraft fees” because their accounts had been emptied without their knowledge.
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 announced.
The company will pay $5 million in refunds to the victims.