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Wells Fargo’s Woes Just Keep On Growing

September 5, 2017

The extent of Wells Fargo’s fake account scandal was far worse than estimated last year, Bloomberg writes.

While the $185 million fine the bank paid last fall followed revelations that its reps had opened up to two million fake debit and credit accounts, the actual figure is around 3.5 million, according to a statement from Wells Fargo cited by the news service.

The new figure is a result of an outside review of more than 165 million deposit and credit-card accounts covering January 2009 to September 2016 -- almost twice as long as the period initially examined, Bloomberg writes.

But the review doesn’t go back to 2002, the news service writes. That was when executives first learned about the practice and began firing the employees involved, investigators hired by Wells Fargo’s board have said, according to Bloomberg. The bank is waiting to settle a $142 million suit alleging its employees opened 3.5 million fake accounts beginning in May 2002, according to the news service.

That settlement could now be in jeopardy as a result of the review not extending back to 2002, according to Bloomberg. A lawyer for some of the plaintiffs tells the news service that attorneys may file written objections to the settlement within the next 15 to 30 days. CEO Tim Sloan told reporters on a conference call Thursday that the bank didn’t go back to 2002 because “the quality of the data tends to decline a bit,” according to Bloomberg. A spokesman for the bank declined to discuss with the news service the deficiencies of data prior to 2009.

Wells Fargo agreed to the additional review following pressure from lawmakers, the news service writes. The bank says it has refunded $3.4 million on top of the $3.3 million it had disclosed in refunds originally, according to Bloomberg.

Overall, Wells Fargo says it’s paid or identified $10.7 million it’s paying back to its clients, which includes $3.7 million covering the complaints process and mediation, the news service writes.

But the bank’s troubles don’t end there. The new review also unearthed 528,000 possibly unauthorized enrollments in online bill-pay, for which Wells Fargo says it’ll pay back $910,000 in fees, according to Bloomberg.

“We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank,” Sloantold reporters in a conference call, according to the news service. The bank will now focus on the refunds and doesn’t plan any additional reviews or firings, a Wells Fargo spokesman tells Bloomberg.

Meanwhile, Sen. Elizabeth Warren, D-Mass., tweeted “Unbelievable” in response to revelations about the additional fake accounts, Reuters writes. She also reiterated her call to bring Wells Fargo’s execs in front of the Senate Banking Committee, according to the newswire.

Wells Fargo continues being plagued by scandal after scandal following the fake account revelations. Last week, Jessica Nibert, a former Wells Fargo mortgage loan officer, filed a lawsuit in U.S. District Court in Charlotte, N.C., alleging sexual harassment by her manager, the Miami Herald reports. The manager had allegedly asked her to make out with him in closets or break rooms, asked her to cook dinner for him naked and told her she looked “hot” while they were at the funeral for her daughter, among other instances of inappropriate behavior and retaliation when she didn’t respond in kind, according to the paper.

The bank apparently failed to do anything in response to her complaints, according to the suit cited by the paper. A spokesman for the bank’s consumer lending unit tells the paper the bank had only just begun a review of the suit and can’t comment further. A lawyer for Nibert declined comment.

Most recently, Wells Fargo was accused of unfairly hiking up refinancing deals, according to the New York Post. Frank Chavez, a former loan officer who’s apparently blowing the whistle on the practice, claims to the paper that the bank’s Beverly Hills, Calif., branch regularly convinced clients to opt for higher interest rates by as much as a quarter of a percentage point to get out of fees for delayed mortgage-refinancing processing. But it was the bank’s loan officers at the branch who were typically responsible for the delays in the first place, Chavez tells the Post.

The revelations come a week after Wells Fargo was slapped with a class-action lawsuit alleging it delayed loans and refinancing and forcing clients into paying “rate lock” fees, according to the paper. A Wells Fargo spokesman tells the Post that it’s common practice to let customers choose a combination of interest rate and points and that the bank is going through review of the rate-lock extension practices.

(Getty)

The bank is also being investigated for freezing or closing real accounts and allegedly causing financial hardship to its customers as a result. Another lawsuit accused Wells Fargo of pushing almost 250,000 customers into delinquency by forcing unnecessary auto insurance on them. Yet another suit alleges that the bank overcharged its merchant credit card clients.

Wells Fargo Advisors, meanwhile, has had its own share of trouble even without the reputational damage it’s likely suffered as a result of shenanigans at the bank. In July the brokerage settled a $3.5 million class action suit brought by advisor trainees who claim the bank made them cover their training costs. The same month, a lawyer for Wells Fargo leaked confidential data on thousands of private client accounts.

By Alex Padalka
  • To read the New York Post article cited in this story, click here.
  • To read the Miami Herald article cited in this story, click here.
  • To read the Reuters article cited in this story, click here.
  • To read the Bloomberg article cited in this story, click here.
  • To read the Bloomberg article cited in this story, click here.