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On September 8 the Consumer Financial Protection Bureau (CFPB) announced a record $100 million civil penalty plus consumer restitution against Wells Fargo, among the nation’s largest banks, for a series of unfair and abusive sales practices by “thousands” of employees that included opening “secret” accounts for “hundreds of thousands” of existing customers, solely to meet sales goals to receive financial incentives. The CFPB action was joined by simultaneous orders announced by the U.S. Office of the Comptroller of the Currency (OCC) ($35 million civil penalty) and the City of Los Angeles ($50 million civil penalty), for a total of $185 million in penalties plus consumer refunds.
The following statement can be attributed to Consumer Program Director Ed Mierzwinski.
“The conduct uncovered by the CFPB and other regulators was beyond outrageous. “Thousands” of employees were pressured by a flawed incentive system and sloppy management into opening “hundreds of thousands” of “secret” deposit accounts and applications filed for “tens of thousands” of credit cards that customers didn’t know about. Of course, many of those customers ended up paying a myriad of fees for the misuse of their personal information and improper transfer of funds. The bank’s conduct was found so egregious that the CFPB consent order requires significant oversight at the Board of Directors level to ensure that management takes its responsibilities to its customers more seriously. We commend the CFPB for taking strong action, first with its record civil penalty, second its requirement that harmed consumers be automatically reimbursed without requiring any action and finally for making it very clear that Wells Fargo cannot offset the $100 million penalty by taking a tax write-off for its wrongdoing.”
“The CFPB took over as the nation’s chief consumer financial regulator just five short years ago in July 2011, following the second-largest financial crisis in our history. Already, it has recovered nearly $12 billion for over 25 million victims of unfair practices by wrongdoers ranging from big banks to small debt collectors. Yet, we remain disappointed that some on Capitol Hill seek to defund and defang the CFPB, even though it pays for itself, and so much more, each and every day. The idea of the CFPB needs no defense, only more defenders.”
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