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Updated on Thursday, August 31, 2017
Wells Fargo’s fraudulent practices have put the company in the public spotlight once again. The bank announced Thursday that employees wrongfully created up to 1.4 million more unauthorized accounts, on top of the discovery last year that employees falsified more than 2 million bank accounts without customer permission.
According to a company statement released Thursday, an expanded analysis of new accounts opened between January 2009 and September 2016 revealed a total of 3.5 million “potentially unauthorized consumer and small business accounts.” That’s almost 70% more fraudulent accounts than previously thought.
The company said Thursday it will provide customers with $2.8 million in total refunds—in addition to the $3.3 million the company pledged last September after the initial scandal was unearthed.
How we got here
After the original news broke in September 2016, Wells Fargo revealed it had fired 5,300 employees in recent years for behavior related to the creation of unauthorized bank accounts. Employees who created the accounts did so in order to increase their earnings and boost sales, a motivation that was later attributed to the hypercompetitive corporate culture at one of the world’s largest banks.
So how did Wells Fargo find more fraudulent accounts almost a year later? The bank says it learned about the additional fraud by studying a total of 165 million accounts created since the beginning of 2009, an expansion on the 93.5 million examined last September. The study also found more of these unauthorized accounts incurred fees and charges than originally thought—190,000 versus the 130,000 initially reported last year.
Unauthorized accounts aren’t the only damaging news the company has dealt with recently. In the past year, the bank has been accused of scamming mom-and-pop shops, admitted to charging up to 570,000 customers for auto insurance they didn’t need, and settled a $108 million lawsuit for concealing loan and mortgage fees from veterans.
Wells Fargo trying to get more fake accounts than you have fake news stories.
— Spicy Boi (@spicy_boitano) August 31, 2017
— Hastin (@hastin) August 31, 2017
What to do if you are a Wells Fargo customer
To determine whether or not you’ve been a victim of these unauthorized accounts, check your credit score and your bank’s website, which will show every account opened in your name.
— Katherine Barlow (@katielbarlow) August 31, 2017
Those who had accounts opened in their name without their permission should inform Wells Fargo immediately, as filing a complaint will put them in the pool of customers who will all split the bank’s $6.1 million of promised restitution. These customers will also receive a portion of the $142 million the company has agreed to pay as part of a class-action suit finalized in April.
Wells Fargo’s response
Wells Fargo CEO Tim Sloan apologized Thursday in a press release for the San Francisco-based company’s failings and attempted to reemphasize some of the bank’s key values.
“Our commitment has never been stronger to build a better bank for our customers, team members, shareholders and communities,” Sloan said in the release.
Despite expressing remorse, the company has fought privately to avoid dealing with the repercussions of its actions. Currently, Wells Fargo contracts contain a provision that forces customers to settle disputes with the bank through arbitration, as opposed to through class-action or individual lawsuits.
This essentially means that any customer who believes they have been treated unfairly is forced to settle with the company on its own terms, rather than on a level playing field in court. While the Consumer Financial Protection Bureau (CFPB) recently drafted a bill that would prevent this practice, Congress may vote to overturn this measure before it becomes law, thus allowing Wells Fargo to continue dodging class-action suits, says Amanda Werner, an attorney for the Washington, D.C.-based Americans for Financial Reform and Public Citizen. Werner specializes in combatting forced arbitration rules.
Ways to avoid fraud
In order to prevent your bank from getting away with similar practices, Werner suggests checking your credit score at least a few times each year. The credit score may indicate if any unauthorized accounts have been opened in your name. You can also get a free annual credit report (which contains more detail than a credit score) from each of the major credit reporting agencies at AnnualCreditReport.com.
Additionally, Werner recommends taking any problems you may have with your bank directly to the CFPB, because its complaint process is typically much faster and more efficient.
“I’ve heard a lot of stories from people who spend hours on the phone with customer service trying to settle something, and then they file a complaint with the CFPB and suddenly the bank is ready to listen to them,” Werner says.
How will other banks respond?
Beyond negative press, Wells Fargo has suffered few consequences for its recent scandals. While speculators are concerned about the company’s reputation hurting its overall value, the bank’s stock has continued to grow, albeit a bit more slowly than expected.
— Larry Kaminer (@safetysecurity) August 31, 2017
Werner worries this, along with the overall lack of legal action against the company, will send the wrong message to other banks dealing with similar fraudulent practices.
“If I’m another bank and I’m doing something shady—but maybe it’s not as bad as 3.5 million accounts—then I feel like I can get away with it because Wells Fargo got away with something worse,” Werner says.