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US banking giant Wells Fargo fined $185 mn for bogus accounts

Wells Fargo employees are accused of illegally boosting sales figures by opening unauthorised accounts. Photograph: (Getty)

WION Washington, DC, United States Sep 09, 2016, 03.50 AM (IST)
Retail and commercial banking giant Wells Fargo has been fined more than $185 million in fines by regulators in US for secretly opening more than a million bogus accounts without the knowledge of the customers.

The Consumer Financial Protection Bureau (CBFC) says the employees of the bank illegally boosted sales figures by opening unauthorised deposit and credit accounts and funded them with customers' money without their permission, sometimes creating phony email addresses to enroll them. 

The San Francisco-based bank will pay $100 million to the CBFC, its largest fine to date, $50 million to the City of Los Angeles, which had filed a lawsuit last year, accusing the bank of pressuring employees into fraudulent behavior, such as opening fictitious accounts, $35 million to the Treasury Department and $5 million to compensate all customers concerned. 

"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," CFPB Director Richard Cordray said in a statement.

Wells Fargo said that it "regretted and took responsibility for the unauthorised accounts." It said a review by a third-party consultant resulted in $2.6 million in refunds to customers for any fees associated with products the account holders "may not have requested." 

“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 company said in a statement.

Wells Fargo found that employees had opened more than 1.5 million bogus deposit accounts alone over 2011-2015 resulting in millions of dollars in customer fees while helping bank employees meet sales targets and receive bonuses.

A bank spokesperson said it had fired 5,300 employees and managers over a five-year period for their involvement in the scam. 

The bank's shares closed fractionally higher at $49.90 on Thursday.

(WION with inputs from agencies)
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