credit fraud

credit fraudThousands of Wells Fargo bank employees seeking sales bonuses participated in a scheme that led to the opening of roughly 2 million unauthorized accounts, federal regulators said Thursday. For failing to monitor an incentive program that spun out of control, leading to “widespread” abuse of consumers’ information, Well Fargo must now pay the biggest-ever penalty levied by the Consumer Financial Protection Bureau (CFPB), the agency said.

At the root of the scheme was a program that gave bonuses to employees who convinced existing customers to give more of their business to Wells Fargo — cross-selling checking account customers on new credit cards, for example.

But back in 2011, Wells employees started opening accounts for consumers — and moving account-holders’ money into them — without their consent or knowledge.

“Thousands of bank employees found ways to game the system by secretly signing up existing clients for new services that were never requested,” CFPB Director Richard Cordray said. “They misused consumer names and personal information to create new checking and credit card accounts to inflate their sales figures to meet their sales targets and claim higher bonuses. Money that belonged to customers was used and moved around without their consent, and in some instances these activities generated new fees and costs.”

Wells workers went so far as to create email addresses that did not belong to their customers and use those new addresses to enroll people in unwanted online-banking services, the CFPB said.

According an analysis conducted by Wells, employees opened roughly 1.5 million deposit accounts, and another roughly 565,000 credit cards, that may not have been authorized by consumers, the CFPB said. Some consumers ended up paying overdraft fees, or facing other financial penalties, because of the unauthorized activity.

Wells has been ordered to pay a $100 million civil penalty, and to refund harmed consumers. The bank will also pay an additional $35 million penalty to the Office of the Comptroller of the Currency, and another $50 million to the City and County of Los Angeles.

“Unchecked incentives can lead to serious consumer harm, and that is what happened here,” Cordray said. “Today’s action should serve notice to the entire industry. If the incentive compensation schemes or sales targets are implemented in ways that threaten harm to consumers and lead to violations of the law, then banks and other financial companies will be held accountable.”

In a statement, the bank said it had terminated managers and team members “who acted counter to our values.”

“Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us,” the statement read. “Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.”

John Stumpf, CEO of Wells Fargo, also sent an email to employees today, which the firm made public.

“Our entire culture is centered on doing what is right for our customers. However, at Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action. Today’s agreements are consistent with these beliefs,” the email read. It told employees to report ethics violations on an anonymous “EthicsLine,” or to their managers or Human Resources adviser.

“As difficult as today’s news is, this is an opportunity to recommit ourselves to our customers, doing all that we can to put their interests first,” Stumpf wrote.

Customers can keep an eye out for unauthorized credit accounts by regularly checking their credit. You can so by pulling your credit reports for free each year at and viewing your free credit report summary, updated every 14 days, on

This article originally appeared on and was written by Bob Sullivan.