LOS ANGELES—The city of Los Angeles has filed a civil lawsuit against Wells Fargo that alleges the $287-billion bank, in a push for growth, often elevated its profits over the legal rights of its customers.
The fraud complaint charges that in order to meet sales quotas, bank employees opened accounts for customers without their authorization, sometimes transferring money from its customers’ authorized accounts to pay fees on the unauthorized accounts. Some customers were placed into collection when fees on unauthorized accounts went unpaid, while others had negative information placed on their credit reports as a result, the complaint said.
Wells Fargo's push to get every customer to carry at least eight different Wells Fargo products has "predictably and naturally, driven its bankers to engage in fraudulent behavior," Los Angeles City Attorney Mike Feuer told USA Today.
The suit alleges that customers with Mexican ID cards were often targeted because of their lack of a Social Security number that made it easier to open numerous fraudulent accounts.
In a statement Wells Fargo said it will "vigorously defend" against the allegations. "Wells Fargo's culture is focused on the best interests of its customers and creating a supportive, caring and ethical environment for our team members. This includes training, audits and processes that work together to support our Vision & Values and our commitment to customers receiving only the products and services they need and will benefit from," the statement said.
Michael Moebs, Moebs $ervices
The lawsuit says Wells Fargo management has also failed to protect customers from the financial harm when they discovered abuses by their sales force.
According to the lawsuit, "On the rare occasions when Wells Fargo did take action against its employees for unethical sales conduct, Wells Fargo further victimized its customers by failing to inform them of the breaches, refund fees they were owed, or otherwise remedy the injuries that Wells Fargo and its bankers have caused.”
Michael Moebs, economist and CEO at Moebs Services in Lake Forest, Ill., is not sure how widespread the bank’s alleged fraudulent have been.
“This could be just a few employees in a few branches, or districts, or even a region that need to meet goals,” Moebs told CUToday.info. “It is highly unlikely this is a culture at Wells Fargo Bank, which is the implication. Also, some of the allegations such as bundling being illegal could very easily be interpreted as allowed under the Commerce Clause of the United States Constitution. However, if the claim is correct about not refunding potential ‘errors’ on a timely basis, there could be cause for reform by the bank and potential refund payment of these allegations.”