An internal investigation at Wells Fargo revealed that the bank’s fake account scandal is a much larger issue than anyone thought.
Nearly a year ago, the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the city and county of Los Angeles levied a $185 million fine against Wells Fargo for 5,000 of the bank’s former employees opening as many as 2.1 million accounts without authorization in order to get sales bonuses.
As it turns out, the number of potentially fake accounts was actually 3.5 million – 1.4 million more than first thought.
In the wake of the bank’s fine, the bank’s CEO and chairman John Stumpf resigned, the bank revoked the 2016 bonuses for its top executives, clawed back even more money from several top execs, fired four senior managers in February, tossed out another two executives in March, and split the role of chairman and CEO after Stumpf stepped down.
The bank is also nearing a $142 million settlement in a class action lawsuit brought by the customers affected by the fake accounts.
The bank also launched an independent investigation into the fake account issue, and back in March, the bank warned that the investigation could show that there were more fake accounts opened by the bank’s employees.
The results of Wells Fargo’s investigation, released Thursday, show exactly that.
According to the bank, its original account analysis reviewed 93.5 million current and former customer accounts opened in an approximately from May 2011 through mid-2015, and found approximately 2.1 million “potentially unauthorized” accounts.
But the bank expanded its investigation to cover a longer period of time – from January 2009 through September 2016. That investigation revealed that there were approximately 3.5 million potentially unauthorized consumer and small business accounts opened during that time.
According to the bank, this new investigation “erred on the side of customers” by conducting “data-driven” analysis and looking at account usage patterns of consumer and small business checking, savings, and unsecured credit card and line of credit account data.
The expanded investigation found that not only were there more total potentially fake accounts opened, there were actually more fake accounts opened in the original review period than first thought.
During the original time period, from May 2011 through mid-2015, Wells Fargo’s investigation found that there were actually 2.55 million potentially fake accounts opened, up from the 2.1 million fake accounts originally thought to be opened during that time.
The expanded investigation found that in the time period outside of that original window, from January 2009 all the way through September 2016, there were 981,000 potentially fake accounts opened.
According to the bank, of those 3.5 million potentially fake accounts, approximately 190,000 accounts incurred fees and charges, up from 130,000 previously identified accounts that incurred fees and charges. The bank said that it will provide a total of $2.8 million in additional refunds and credits in addition to the $3.3 million previously refunded as a result of the original account review.
But that wasn’t all the new investigation found.
The expanded analysis included a review of online bill pay services, as required by the consent orders signed as part of the original CFPB fine.
That review found that during the nearly eight-year review period, the bank engaged in approximately 528,000 potentially unauthorized online bill pay enrollments. The bank said that it will refund $910,000 to customers who incurred unauthorized fees or charges during the time.
In addition to the original remediation efforts, Wells Fargo said that already provided more than $3.7 million in refunds and credits to customers for complaints and mediation claims from Sept. 8, 2016, through July 31, 2017.
“We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank,” Wells Fargo CEO Tim Sloan said in statement.
“To rebuild trust and to build a better Wells Fargo, our first priority is to make things right for our customers, and the completion of this expanded third-party analysis is an important milestone,” Sloan continued. “Through this expanded review, as well as the class action settlement, free mediation services, and ongoing outreach and complaint resolution, we’ve cast a wide net to reach customers and address their remaining concerns. Our commitment has never been stronger to build a better bank for our customers, team members, shareholders and communities.”
Wells Fargo said that it will so begin communicating with affected customers who are part of class action lawsuit that led to a $142 million settlement to ensure that they receive their part of the settlement.
Wells Fargo also encourages customers who believe they had a fake account opened in their name to contact the bank to receive appropriate remediation and compensation.
“As always, we welcome – and encourage – customers with questions or concerns to visit a branch or call our contact center,” Sloan added. “There is nothing more important to me and to Wells Fargo than rebuilding trust with our customers and helping them succeed financially. We are working hard to ensure this never happens again and to build a better bank for the future.”
