In one of the most shocking events in the financial world, Wells Fargo was recently fined by multiple regulators for creating fake bank and credit accounts for their customers and charging fees associated with the fraudulent accounts. These fines have amounted to hundreds of millions of dollars and resulted in the termination of thousands of Wells Fargo employees.
It has come to light that the employees of the company were given unrealistic sales quotas and pushed to use highly unethical policies for obtaining them. Whenever an enormous scandal occurs in the financial world the first instinct is that a few high ranking officials were the perpetrators. However, the crimes committed in this instance were by a plethora of lower ranking employees.
The unrealistic quotas were met by the opening of additional accounts for current customers without their consent. Fees were then charged to customers that unknowingly had their funds relocated to the fraudulent accounts. According to the Consumer Financial Protection Bureau (CFPB), these practices were considered “widespread” throughout the company. The bank was charged the biggest fine since the CFPB came into existence, amounting to $185 million dollars. The company is also facing a lawsuit where plaintiffs seek to recover over $2 billion dollars.
The pressure to reach the sales quotas at Wells Fargo appear to be the motivating factor behind the creation of the millions of fake bank and credit card accounts. Low level employees may have been given incentive to resort to these illegal methods for the fear of losing their jobs. Wells Fargo employees indicated that failing to reach quotas or refusing to adopt the unethical tactics normally resulted in being terminated for minute reasons unrelated to sales quotas.
It is terrifying that a company as large as Wells Fargo would condone stealing money from its own customers. The banking and financial worlds are complex and very difficult to fully understand for most. The lesson learned from this scandal is that as a customer of any banking or financial institution, you must be aware of all account activity and question all suspicious charges or fees. Take some time to familiarize yourself with the basic concepts of how your money is handled and avoid being the victim of financial crimes.
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