Wells Fargo had strict quotas for bankers to get a certain amount of "solutions" per day. These "solutions" include the opening of all new banking and credit card accounts but it was nearly impossible for bankers to hit these quotas. Employees not meeting this quota "are often required to work hours beyond their typical work schedule without being compensated for that extra work time, and/or are threatened with termination" as stated in the complaint filed last year.
What did the employees do?
Between 2011 to 2015, in the practice known at Wells Fargo as "pinning," a Wells Fargo banker obtains a debit card number, and personally sets the PIN, often to 0000, without customer authorization. "Pinning" permits a banker to enroll a customer in online banking, for which the banker would receive a solution (sales credit). To bypass computer prompts requiring customer contact information, bankers impersonate the customer online, and input false generic email addresses such as email@example.com, firstname.lastname@example.org, or email@example.com to ensure that the transaction is completed, and that the customer remains unaware of the unauthorized activity. As a result, Wells Fargo fired 5,300 employees linked to this fraudulent activity.
What happened to victims?
85,000 victims incurred roughly $2 million in fees from the opening and maintenance of the unauthorized accounts. Over 500,000 victims had credit cards opened without their knowledge which incurred roughly $400,000 in fees. All of the fees are in the process of being refunded but to open a credit card, you have to pull a credit report and this unauthorized pull could have affected the person's credit.
Victims will be reimbursed and Wells Fargo's stock price dropped 10% when this was first announced. Many ex-Wells Fargo employees are coming forward claiming they were told to commit the fraud by branch managers and were fired once they called the Wells Fargo Ethics Hotline. These claims are being investigated and we'll see how far up the ladder this goes in the upcoming weeks. Wells Fargo was also required to pay a fine of $185 million which is less than the amount C.E.O. John Stumpf made in stock increases during the period this fraud was committed.
What should I do?
One thing concerns me that really isn't being talked about is additional fraud that could result from this initial incident. During this five year period, bankers could have stolen personal identifiers from victims and used them to open additional fraudulent accounts or sold the information to identity thieves. I stress monitoring your credit reports (which you can check for free at www.AnnualCreditReport.com) and if you banked with Wells Fargo over the past five years, you should look into a credit monitoring service.
Watch Senator Elizabeth Warren completely rip into Wells Fargo's C.E.O. John Stumpf