Wells Fargo is in hotter water than ever with its recent estimate of even more bogus customer accounts. An additional 1.4 million unauthorized accounts were recently discovered, bringing the total to about 3.5 million. This revised estimate covers January 2009 through September 2016—about twice as long as the original outside review investigated.
Almost a year ago, regulators hit Wells Fargo with a $185 million fine over its sales practices, including Congressional hearings and the firing of much of the company’s leadership. Then the City of Philadelphia sued the bank for alleged predatory lending practices.
Up to this point, the company says it’s paid or identified $10.7 million in customer compensation, which includes $7 million in refunds and $3.7 million for the “complaints process/mediation.”
“Today’s announcement is a reminder of the disappointment that we caused to our customers and stakeholders,” said CEO Tim Sloan of the latest news. “We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank.”
One theory for why these business practices were allowed to continue has to do with the pressure on Wells Fargo employees to perform at a certain level. Struggling to hit sales goals, thousands of employees created accounts in customers’ names without those customers’ knowledge or approval. (In fact, many customers didn’t even know they had accounts until those accounts incurred fees—$910,000 of which, according to Wells Fargo, will now be reimbursed.) Employees creating these fake accounts were likely acting out of fear of being fired—a potential result of their failing to meet aggressive sales goals.
“The branch managers were always asking, ‘How many solutions did you sell today?’” said former employee Sharif Kellogg. “They wanted three to four a day. In my mind, that was crazy—that’s not how people’s financial lives work.”
Kellogg was making $11.95 an hour when he left Wells Fargo in 2012.
Predictably, the continued drama has affected Wells Fargo shares. Having already dropped 7.2 percent this year, after this latest announcement, shares declined a further 0.4 percent to $51.17.
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