Wells Fargo has come under fire after the Consumer Financial Protection Bureau reported last week that since 2011, bank employees secretly created millions of unauthorized bank and credit card accounts. Wells Fargo confirmed to CNN that 5,300 employees had been fired over several years related to the fraudulent accounts.
Employees began opening these accounts and credit cards to reach sales goals and receive bonuses. The accounts earned the bank fees while boosting Wells Fargo employees' sales. Employees created fake PIN numbers and email addresses to enroll unaware customers in online banking services, according to a statement from the CFPB. It is estimated that bank employees opened over 1.5 million unauthorized accounts. Employees moved money from authorized, existing customer accounts into new, fraudulent accounts without the customer's knowledge or consent. Customers were then charged for insufficient funds and overdraft fees because there was no money in the original account.
The CFPB, founded in 2011, has issued Wells Fargo the largest penalty since the bureau's inception. Wells Fargo must pay full restitution to all victims - a penalty of $185 million in fines along with $5 million in customer refunds. The CFPB declined to comment on when the investigation began, but some believe it was sparked by a lawsuit from the Los Angeles City Attorney's office in May of 2015 for alleged unauthorized accounts. In a memo to employees, Wells Fargo admitted the mistakes and promised to take responsibility. The bank must revise sales practices and internal oversight as part of the settlement deal.