- Wells Fargo has been fined a whopping $3 billion for unlawful sales practices affecting millions of customers spanning.
- Wells Fargo is an investment banking, mortgage, investing, and small business company that handles consumer and commercial finance.
Wells Fargo has been fined a whopping $3 billion for unlawful sales practices affecting millions of customers spanning for a period of 15 years by the Department of Justice USA.
It has also been asked for a penance of $500 million as a civil penalty for misleading investors about the success of its largest business unit.
About Wells Fargo:
Wells Fargo is an investment banking, mortgage, investing, and small business company that handles consumer and commercial finance. Founded in 1852 and headquartered in San-Francisco, the company currently owns $1.9 trillion assets, 7400 locations, and more than 13k ATMs and offices in 32 countries.
Why is Wells Fargo been charged?
According to the DOJ USA, Wells Fargo admitted to using unethical and illegal sales practices between 2002 and 2016 when the company pressured its employees to meet unrealistic sales goals.
The company agreed to acquire millions of dollars, which was not entitled to illicit ways by forging customers’ signatures and embezzling consumers’ sensitive personal data.
From 2002-2016, Wells Farago’s Community Bank used “gaming” strategies to raise the revenue for the company including opening unauthorized accounts by forging customer’s signature, generating PIN’s to activate illegal debit cards, pulling money from millions of customer accounts into an unofficial accounting a practice known as ‘simulated funding.’
Also, altering customer’s original contact information that helps to prevent them from learning and get informed about unaccredited accounts, restricting Wells Fargo’s employees from communicating with customers to conduct customer satisfaction surveys, and inspiring customers to open accounts which they don’t need.
The investigations revealed that the top managers of the firm were aware of the ongoing fraudulent practices and became a blind eye towards it to keep the sales pitch going.
What does the settlement entail?
The $3 billion settlement resolved three matters for Wells Fargo; criminal investigation into false bank records, identity theft and forgery resolved with a deferred prosecution agreement in which Wells Fargo will not be prosecuted during the 3-year term of the agreement if it abides by certain terms and conditions, which also includes keep on cooperating with further government investigations according to the DOJ.
Also, a civil settlement agreement of $500 million under the FIRREA (Financial Institutions Reform, Recovery and Enforcement Act) 1989.