Federal prosecutors in Los Angeles and North Carolina, along with U.S. banking regulators, announced Friday that Wells Fargo will pay $3 billion to resolve allegations that its employees opened millions of accounts in customers’ names without consent in an effort to meet “onerous sales goals.”
“This case illustrates a complete failure of leadership at multiple levels within the bank,” said Nick Hanna, U.S. Attorney in Los Angeles. “Simply put, Wells Fargo traded its hard-earned reputation for short-term profits and harmed untold numbers of customers along the way.”
According to the U.S. Attorney’s Office, Wells Fargo admitted in the settlement agreements that it collected millions of dollars in fees and interest, while misusing customers’ personal information and harming many of their credit ratings.
Federal officials said the troubles dated back to 1998, when the bank implemented a “cross-sell strategy” aimed at selling various financial products and accounts to its customers. The bank pressured its employees to sell large volumes of products regardless of whether customers actually needed or could benefit from them. Prosecutors said the company’s “onerous sales goals” led thousands of bank employees to engage in fraud and other unethical practices, leading to the opening of checking, savings, credit card, debit card and other types of accounts, often without customers knowledge or consent.
“This settlement holds Wells Fargo accountable for tolerating fraudulent conduct that is remarkable both for its duration and scope, and for its blatant disregard of customers’ private information,” said Deputy U.S. Attorney General Michael D. Granston.
In a statement, Wells Fargo CEO Charlie Scharf said the conduct that led to the settlement with the Department of Justice and U.S. Securities and Exchange Commission was “reprehensible and wholly inconsistent with the values on which Wells Fargo was built.”
“Our customers, shareholders and employees deserved more from the leadership of this company,” he said. “Over the past three years, we’ve made fundamental changes to our business model, compensation programs, leadership and governance. While today’s announcement is a significant step in bringing this chapter to a close, there’s still more work we must do to rebuild the trust we lost. We are committing all necessary resources to ensure that nothing like this happens again, while also driving Wells Fargo forward.”