Los Angeles sues Wells Fargo for fraud, says bank workers opened accounts without customer OK
The city of Los Angeles has filed suit against Wells Fargo Bank, contending that it engaged in unfair business practices by encouraging employees “in unfair, unlawful and fraudulent conduct.”
Pressured by their employer to meet sales quotas, Wells Fargo workers routinely opened bank and credit card accounts for existing customers without permission, resulting in additional fees and reduced ability to quality for credit elsewhere, alleges the suit filed Monday by Mike Feuer, the city attorney. It seeks a Los Angeles Superior Court order requiring the bank to comply with the law, a $2,500 penalty per violation under the state’s unfair competition statute and restitution, according to Bloomberg and the Los Angeles Times (sub. req.).
The suit also contends that Wells Fargo workers lied to customers about the need to open additional accounts to get a checking account, falsely told them that accounts didn’t carry fees when they did and pushed customers to purchase additional products such as life insurance, Bloomberg reports.
“Wells Fargo puts unrelenting pressure on its bankers to open numerous accounts per customer,” says the city. “Wells Fargo’s bankers are thus naturally and predictably forced to alternative means to meet quotas.”
The bank additionally violated state and federal law, the suit alleges, by misusing customers’ personal information and failing to disclose to customers that their personal information had been misused, the Times reports.
The bank has said it acted appropriately to discipline a few rogue employees who misused customer data to open unauthorized accounts and promises a vigorous defense against the suit, the newspaper reports.
“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 in a written statement provided to the Times. “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 newspaper, which has previously reported on customer issues with unwanted Wells Fargo accounts, spoke with convenience store owner Frank Ahn. He said he opened three Wells Fargo accounts, but wound up with 10 as the bank opened more without his OK, resisted his efforts to close them, both over the phone and in a personal visit to the bank, and charged him additional fees.
He said he couldn’t cancel the accounts and start over at another bank because of the many suppliers who were linked to his Wells Fargo accounts.
“This is making me a less productive person,” he told the Times. “I should be spending my time improving the productivity of my business instead of this.”
The bank declined to comment on Ahn’s claims.
Hat tip: Associated Press
Related coverage:
Los Angeles Times (sub. req., 2013): “Wells Fargo’s pressure-cooker sales culture comes at a cost”
San Francisco Business Times (2013): “Wells Fargo fires 30 employees over fake new accounts”
American Banker (2014): “The Downside of the Data-Driven Decision”
