Wells Fargo bank, one of the largest in the nation, has found itself in hot water after the corporate giant’s unrealistically aggressive sales and incentive structure wound up seeing employees opening thousands of sham accounts and credit cards in unsuspecting clients’ names, later resulting in a $185 million civil settlement. In addition to other illegal practices, a reported 565,000 credit cards and 1.5 million fake accounts were opened. The scandal was first reported by The Los Angeles Times in 2013, with longtime CEO John G. Stumpf and other top executives initially denying the goings on had anything to do with their sales and incentive practices. A total of 5,300 employees have lost their jobs, with the bank continuing to fire workers over “questionable accounts” well into this year.
As part of their attempt to clean up their act, the bank began implementing stricter ethics policies, telling workers during a two-day seminar that took place in 2014 it was unacceptable (as well as illegal) to open accounts in clients’ names without their permission and they should never engage in the practice. However, former employees have stated it wasn’t that simple given the unrelenting push to meet sales goals in order to receive a bonus or, in some cases, keep their jobs. Khalid Taha is a former personal banker for Wells Fargo who resigned his position in July. He said, “They warned us about this type of behavior and said, ‘You must report it,’ but the reality was that people had to meet their goals. They needed a paycheck.” Taha is now a member of the advocacy group Committee for Better Banks, which implores banks like Wells Fargo to provide better conditions for standard employees working to make ends meet.
As a condition of their employment, associates were required to meet certain sales goals, which the bank referred to as “solutions,” and were constantly hounded if they failed to achieve them. During a discussion on Reddit.com, several former employees insisted they had no other choice but to create sham accounts to avoid being written up or fired. One past employee said it was common to ask businesses or people they knew to open accounts in order to reach their sales goals, with the promise of being able to close them shortly after opening them. Sharif Kellogg, who was earning $11.75 per hour as a teller in a Maryland branch said, “The branch managers were always asking, ‘How many solutions did you sell today? They wanted three to four a day. In my mind, that was crazy — that’s not how people’s financial lives work. I was always getting written up for failing to bump my solutions numbers up.” Another anonymous employee, during the Reddit discussion, wrote “During our training we go through SO much training about ethics and how you CANNOT do that. I got threatened to be fired as a teller with them because I wasn’t meeting my numbers. I told them I didn’t believe in trying to convince someone to spend money they don’t have, get what they don’t need.” But the managers pressed on, eventually growing tired of writing up employees they knew were creating the fraudulent accounts because it had become so commonplace and as long as the bank was making money, they found it too difficult to police.
Among the thousands of customers affected by the practice, and some who were customers of the bank but not victims of the crime, many have stated they plan to take their business elsewhere in a stand against Wells Fargo. In 2015, 52-year-old Pennsylvania resident Walter Mankowski discovered a credit card had been unlawfully opened in his name after noticing a $45 annual fee on his bank statement. When he called the bank he said, “It took talking to three different people at Wells Fargo to cancel it. I probably spent half an hour on the phone trying to cancel this card I didn’t know about and didn’t want.”
On Tuesday, September 20, Mr. Stumpf was expected to testify at a Senate Banking Committee where prosecutors may or may not bring charges. Though he initially said he felt he was accountable for the bank’s misdeeds, he ultimately blamed the workers “misinterpreting” the bank’s intended sales goals. However, an advanced transcript of the testimony he was expected to give, first obtained by The New York Times, indicated he planned to take “full responsibility” for the scandal, claiming he felt “deeply sorry” for the customers who were affected by the unauthorized and unethical activity. Whether prosecutors intend to bring further charges remains to be seen.
Sources:
Wells Fargo Warned Workers Against Fake Accounts, but They ‘Needed a Paycheck’
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