Millions of fake accounts at Wells Fargo

[Altherion]

For people who have not heard of it, Wells Fargo is one of the largest banks both in the US and worldwide. It was recently discovered that thousands of their employees were creating new accounts of various types and moving money around. Here's the report of the agency that fined them (PDF), a couple of general articles on the subject (CNN, Time) and a Bloomberg article more sympathetic to the people who did this. From the PDF:

Quote

9. Thousands of Respondent’s employees engaged in Improper Sales Practices to satisfy sales goals and earn financial rewards under Respondent’s incentive-compensation program. During the Relevant Period, Respondent terminated roughly 5,300 employees for engaging in Improper Sales Practices.

10. Respondent’s employees engaged in “simulated funding.” To qualify for incentives that rewarded bankers for opening new accounts that were funded shortly after opening, Respondent’s employees opened deposit accounts without consumers’ knowledge or consent and then transferred funds from consumers’ authorized accounts to temporarily fund the unauthorized accounts in a manner sufficient for the employee to obtain credit under the incentive-compensation program.

11. Respondent’s employees submitted applications for and obtained credit cards for consumers without the consumers’ knowledge or consent.

12. Respondent’s employees used email addresses not belonging to consumers to enroll consumers in online-banking services without their knowledge or consent.

13. Respondent’s employees requested debit cards and created personal identification numbers (PINs) to activate them without the consumer’s knowledge or consent.

This goes far beyond aggressive sales practices and well into the territory of fraud and identity theft. As there were over 5000 employees engaged in this activity and over 2 million fake accounts were created this way, it was on a much large scale than usual. However, as is usually the case with large banks, they seem to have gotten away with a relatively small fine: roughly $190M of which only about $5M goes to the customers they defrauded to pay for fees generated by these fraudulent accounts. If these numbers sound large, keep in mind that in 2015, Wells Fargo had a revenue of $86B and a profit of $23B so $0.2B is not even a percent of the latter.

It'll be interesting to see if they get away with it or if there are still individual trials pending. After all, when you are counting on money being in your bank account and it mysteriously vanishes, the issue is not just the fee. Likewise, a fraudulent credit card that is never used will still impact a person's credit rating.

[DanteGabriel]

If you have to fire 5,000 employees for this abuse, then you need to lop off some heads at all levels, including the top. This fish definitely rotted from the head down. Sadly, I am sure those who are actually responsible for setting sales policies and instituting that abusive culture are well insulated from any consequences.

Fuck Wells Fargo. The first time I tried to go through a home loan process was through them, and it was a shitshow. From a dishonest loan officer (more like a used car salesman) to departments that gave conflicting information to contacts who were irresponsible about communication. I'll never give them my business again and I steer everyone I can away from those fucked up greedheads.

[Ser Scot A Ellison]

This is another reason why I prefer small local banks that are being choaked to death by regulations designed for the Wells Fargos of the world.

[DanteGabriel]

10 minutes ago, Ser Scot A Ellison said:

This is anothet reason why I prefer small local banks that are being choaked to death by regulations designed for the Wells Fargos of the world.

This is why my wife and I went with a local bank for our home loan a few years later. The Wells Fargo deal fell through, though in the end it was probably a good thing that their incompetence delayed my first loan application -- my employer went belly-up three days before we were supposed to close (actually WF had their hands in my employer's financial troubles as well, and the dishonest loan officer was pals with our executives). We backed out. I lost some of my deposit but at least I'm not on the hook for thirty years to those fucking weasels.

[Larry of the Lawn]

My small local bank has been repeatedly been bought out by larger banks, eventually by First Niagara, which has branches all over NY, CT, MA, and possibly points beyond.  And just today I got a thing in the mail informing me that First Niagara has now been bought out by the even larger Key Bank.  Time to go credit union, I guess 

 

Eta:. And WF sucks.  I used to get my paycheck from them and they'd charge me $5 to cash it there.

[Maithanet]

3 minutes ago, larrytheimp said:

My small local bank has been repeatedly been bought out by larger banks, eventually by First Niagara, which has branches all over NY, CT, MA, and possibly points beyond.  And just today I got a thing in the mail informing me that First Niagara has now been bought out by the even larger Key Bank.  Time to go credit union, I guess 

A few years ago Capital One bought my local Chevy Chase Bank and changed policies on a CD that I had already opened so that I had to pay them a $350 fee to access my money.  I closed my account and went credit union, and I couldn't be happier with the decision.

[S John]

I've got my pitchfork on standby, motherfuckers.  

[Larry of the Lawn]

7 minutes ago, Maithanet said:

A few years ago Capital One bought my local Chevy Chase Bank and changed policies on a CD that I had already opened so that I had to pay them a $350 fee to access my money.  I closed my account and went credit union, and I couldn't be happier with the decision.

o_0. That's nuts.  I noticed in the massive paper stack they sent me that I will be paying $7 a month for my checking account, which will now be non-interest bearing.  Hardly $350, but they also increased the scope of ATM fees on me.

 

I also have my business account there which I am definitely moving as well.

 

[Jo498]

Cue the canonical Bertolt Brecht and Woody Guthrie quotations:

What is the robbing of a bank compared to the founding of bank?

Yes, as through this world I've wandered
I've seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.

[Iskaral Pust]

This was a pretty incredible scale of criminal fraud.  I don't understand how this was only a fine of $190m and no jail time. Unlike some of the nebulous and less tangible past prosecutions of banks, the intent and direct harm are very tangible and easy to pinpoint here.  Plus the high pressure culture, lack of oversight and apparently low ethical standards are a systemic problem here.  This wasn't a lone wolf, it was thousands of employees doing it. 

I used to have a high opinion of WF as a well run retail bank that generally looked out for customers pretty well; more of a Midwest than east coast sensibility.  I'm shocked by how little publicity this is getting in the mainstream media. 

[Lany Freelove Cassandra]

I work at Wells Fargo, but in a very different department. For an inside perspective,  people in my office are completely shocked over this, and my manager is outraged.   (I can't even express how upset he was by this! I was genuinely surprised by his reaction)

(we don't deal with individual customers, but rather with other investment banks)

Performance quotas and incentives are almost always a bad thing, and can lead to this type of behavior (no matter the type of business--even police and tickets have had problems when on the quota system) 

[Corvinus85]

2 hours ago, Lany Freelove Cassandra said:

I work at Wells Fargo, but in Capital Markets, Asset Sales, as a Due Diligence manager for loans we sell. For an inside perspective,  people in my office are completely shocked over this, and my manager is outraged.   (I can't even express how upset he was by this! I was genuinely surprised by his reaction)

(we don't deal with individual customers, but rather with other investment banks)

Performance quotas and incentives are almost always a bad thing, and can lead to this type of behavior (no matter the type of business--even police and tickets have had problems when on the quota system) 

I could not agree more with this. It's sad that it came to this.

I will keep my WF account for now, but I, too, am glad that for my home loan I used a local bank.

[Weeping Sore]

On ‎9‎/‎9‎/‎2016 at 3:10 PM, Ser Scot A Ellison said:

This is anothet reason why I prefer small local banks that are being choaked to death by regulations designed for the Wells Fargos of the world.

Actually a lot of the reforms passed by Congress in 2010 applied only to banks with > $10 Billion in assets. So the smaller banks are somewhat less regulated.

As for the WF thing, there had to have been a lot of blind-eye turning by higher-ups, hopefully some of them are part of the purge.

 

[The Lone Rider]

If I understand this correct , bankers got their commission for certain actions. These usually invoice opening accounts. The more accounts you open, the more money you get. Commission is a bonus. It's not a requirement for your base salary. Many banks create a quota of sales that they expect their bankers to hit. When accounts are opened with certain products(direct deposit, online banking, etc) is profitable for the bank.Wells Fargo had an environment, where if your bankers were not making enough commission, they were reprimanded. Every location has a limited amount of customers. The quotas at Wells Fargo were much higher than achievable. This is a tactic for any sales force to raise the bar higher to get your team to perform harder. Unfortunately the quotas were so high, and the pressure on the employees was equally high, many resorts to illegal actions to achieve those goals.Bankers opened accounts without the owners permission. Credit cards, checking, savings, online banking, bill pay. They would transfer money around to these accounts, simulate the activity that would get them paid, and transfer it back. The banker hits their numbers, three bank looks profitable, no one thinks about it. This goes on for years, and customers are asking about credit cards/accounts they never applied for. 

Why ? Don't these people usually make somewhere between 25-30 K without commissions ? 

Such a drastic beach across the board shows that when you create a highly pressured incentive based system, and punish those who perform poorly, you'll create a corrupt system. There was no one looking to see if these dates were legitimate, they only cared that numbers were met.

[Dr. Pepper]

 

18 minutes ago, The Lone Rider said:

If I understand this correct , bankers got their commission for certain actions. These usually invoice opening accounts. The more accounts you open, the more money you get. Commission is a bonus. It's not a requirement for your base salary. Many banks create a quota of sales that they expect their bankers to hit. When accounts are opened with certain products(direct deposit, online banking, etc) is profitable for the bank.Wells Fargo had an environment, where if your bankers were not making enough commission, they were reprimanded. Every location has a limited amount of customers. The quotas at Wells Fargo were much higher than achievable. This is a tactic for any sales force to raise the bar higher to get your team to perform harder. Unfortunately the quotas were so high, and the pressure on the employees was equally high, many resorts to illegal actions to achieve those goals.Bankers opened accounts without the owners permission. Credit cards, checking, savings, online banking, bill pay. They would transfer money around to these accounts, simulate the activity that would get them paid, and transfer it back. The banker hits their numbers, three bank looks profitable, no one thinks about it. This goes on for years, and customers are asking about credit cards/accounts they never applied for. 

Why ? Don't these people usually make somewhere between 25-30 K without commissions ? 

Such a drastic beach across the board shows that when you create a highly pressured incentive based system, and punish those who perform poorly, you'll create a corrupt system. There was no one looking to see if these dates were legitimate, they only cared that numbers were met.

I'm sorry, but do you actually think 25-30k is a good wage?  For a single person?  For a family of 2?  Of 4?  Remember, that 25-30K gets whittled down fast with taxes and insurance so that after paying for basic living expenses there is barely anything left.  

 

My sister worked for Wells Fargo in the customer service department until recently.  She feels a bit shaken about this because she definitely participated in a lot of these shady practices.  She was taught it by her trainer and everyone talked about ways to reach quotas and such during lunch breaks.  Most of the time managers were standing right there.

I think a lot of people who have worked in any sort of retail or call center might be very familiar with these sorts of practices. 

[The Lone Rider]

Just now, Dr. Pepper said:

 

I'm sorry, but do you actually think 25-30k is a good wage?  For a single person?  For a family of 2?  Of 4?  Remember, that 25-30K gets whittled down fast with taxes and insurance so that after paying for basic living expenses there is barely anything left.  

 

My sister worked for Wells Fargo in the customer service department until recently.  She feels a bit shaken about this because she definitely participated in a lot of these shady practices.  She was taught it by her trainer and everyone talked about ways to reach quotas and such during lunch breaks.  Most of the time managers were standing right there.

I think a lot of people who have worked in any sort of retail or call center might be very familiar with these sorts of practices. 

No, but it doesn't quite explain why someone would take such risks just for their commission. The whole 'implicitly encouraged at work' thing makes more sense though. 

 

[all swedes are racist]

obviously Stanek is to blame

[DanteGabriel]

18 minutes ago, The Lone Rider said:

No, but it doesn't quite explain why someone would take such risks just for their commission. The whole 'implicitly encouraged at work' thing makes more sense though. 

 

One story I read had it that people were getting their sales volume checked four times per day and management was yelling at them to get their relatives to sign up for unneeded accounts. It's a fucked up culture that results in unethical behavior or firing. Of course, low and mid-level people get whacked while the greedheads who created the culture and instituted those ridiculous benchmarks fail sideways and upwards and collect bonuses, because look how much sales activity their departments generated over the years!

[The Lone Rider]

1 minute ago, DanteGabriel said:

One story I read had it that people were getting their sales volume checked four times per day and management was yelling at them to get their relatives to sign up for unneeded accounts. It's a fucked up culture that results in unethical behavior or firing. Of course, low and mid-level people get whacked while the greedheads who created the culture and instituted those ridiculous benchmarks fail sideways and upwards and collect bonuses, because look how much sales activity their departments generated over the years!

I'll be really pissed if the higher ups again manage to dodge the bullet while scapegoats in middle management and low tier get slaughtered. There's no way this happened under the noses of the guys at top.

[all swedes are racist]

43 minutes ago, The Lone Rider said:

I'll be really pissed if the higher ups again manage to dodge the bullet while scapegoats in middle management and low tier get slaughtered. There's no way this happened under the noses of the guys at top.

Well, get ready to be pissed