“Today’s announcement is a reminder of the disappointment that we caused to our customers and stakeholders,” CEO Tim Sloan said on a conference call Thursday with reporters. “We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank.”
Democrats led by Representative Maxine Waters of California earlier this month called for a House Financial Services Committee hearing about a separate scandal at Wells Fargo involving unwanted car insurance imposed on auto-loan customers. And Senator Elizabeth Warren of Massachusetts wrote to the Federal Reserve to again press for the removal of board members who served during the original accounts review period of 2011 to 2015.
Third-Party Probe
The lender warned investors in March that its initial bogus-accounts estimate was probably too low, saying in its annual filing that a new search by a third-party firm “could lead to, among other things, an increase in the identified number.”
Wells Fargo has worked to minimize the impact of the new tally, describing the additional accounts as those it couldn’t rule out from lacking customer authorization. The company said in the statement that it erred on the side of its customers during the review, so the figures might include some accounts that were properly authorized.
When it fined Wells Fargo last year, the CFPB ordered the bank to identify all customers affected by its sales misconduct and set aside $5 million for those harmed.
Customer Payments
Wells Fargo paid $3.26 million to customers covered under that order through June 30, as well as one from the Office of the Comptroller of the Currency and a judgment from the Los Angeles City Attorney, according to the bank’s most recent quarterly filing. In August, Sloan said refunds and payments to affected customers and others he didn’t identify were “exceeding $5 million.”
The 2016 analysis found the bank charged $2 million in fees on 85,000 deposit accounts that were probably opened without authorization, according to the CFPB’s order. About 14,000 bogus credit-card accounts were billed approximately $403,000, the agency said.
The new review doesn’t go back as far as 2002, the year that executives first knew about the sales misconduct and fired employees over it, according to investigators hired by the company’s board. Lawyers representing customers who said they were harmed by the bank’s abusive sales practices claimed in a lawsuit that Wells Fargo employees probably created 3.5 million bogus accounts starting in May 2002. Wells Fargo is awaiting final approval to settle that case for $142 million.