Wells Fargo Lawsuit

Customer Fraud Case Costs Wells Fargo $190 Million

According to state and federal regulators, Wells Fargo participated in identity theft of its own customers by adding on products that customers didn’t intend to purchase, or in some cases, even know about, that added income for the bank and assisted its salespeople in meeting impossible to meet sales expectations, garnering commissions in the process.

Wells Fargo lawsuit settlement

Products involved were credit cards, ghost deposits, identity theft protection programs, savings accounts, online accounts – all products that would generate fees to the customer and revenue to the second largest bank in the US. Retail banks add to their income and revenue streams by “cross-selling”, or selling to current customers other products or services that cost fees. Wells Fargo is reported to have a “Gr-eight” initiative, in which the goal is to increase the sales of products to customers to eight product per customer. A Los Angeles city lawyer filed a complaint on behalf of salespeople and customers that this goal is a civil violation as it is impossible to reach without fraud or overreaching of authority. It has been found that this behavior has been not just recent, but for more than five years and likely even longer.

Identity Theft

Wells Fargo was even involved in the illegal use of another person’s data, and unauthorized people being able to access personal information of customers. According to prosecutors, ghost deposits and credit card accounts, to the number of 2 million, were made for customers, without knowledge, consent or deception. For some customers, the fees added up to the point where credit reports were affected and costs exceeded the money the customer had available. In an ironic aside, these actions frequently encouraged customers to purchase an identity theft product from Wells Fargo itself. Double benefit for Wells Fargo in revenue streams and complete deception to the customers, who were in essence purchasing something from the identity thief to protect their identity.


Wells Fargo reports that they have refunded $2.6 million to customers affected, who were identified in a review, and the refunds are for “any fees associated with products customers received that they may not have requested”, thought this does not identify products involved. According to Wells Fargo, this is limited to 1 percent of customer accounts. Another action Wells Fargo reports they have taken is the firing of 5300 employees, reported by Mary Eshet of Wells Fargo, from 2011 to 2016, and involving these practices. It has been alleged by prosecutors that with employees fired over the years for such acts, it allows Wells Fargo to deceive regulators into the view that Wells Fargo has been addressing these practices, when in fact they have not, they have been cultivating them. Plausible deniability is the result of simple, on the surface changes. As a result, Wells Fargo must now have an independent firm address sales practices and training, as well as compliance with regulations. The bank has an agreement with the Consumer Finance Protection Bureau to institute this in an effort to reform practices.

Wells Fargo has been accused of manipulative and abusive tactics with its sales staff in order to generate increased revenues. Commisssions are based on sales, and the requirements have been at an unattainable level, per prosecutors. The pressure on staff to meet these goals has perpetuated the fraud and illegal practices, as employees of Wells Fargo attempt to meet these expectations. Without high pressure sales on more products per customer, and even to the point of using “simulated funding” to build unauthorized accounts, a practice where money is taken from a customer’s authorized account and deposited into one that the customer did not authorize, one that generates additional fees. The legal complaint filed by LA prosecutors states, “managers constantly hound, berate, demean and threaten employees to meet these unreachable quotas.. often tell employees to do whatever it takes to meet quotas” which builds an environment rife with opportunities and motivations for abuses, fraud and deception.