Wells Fargo will be paying out $37 million to settle claims by the government that the bank had involvement in hundreds of accounts of fraud.
More than 750 people were apparently the victims of fraud by the way of Wells Fargo bank. Sales specialists for the bank were reportedly overcharging the exchange rate transactions for these customers. All of this happened between 2010 and 2017.
“Through this brazen and wide-ranging fraud, Wells Fargo was able to secretly obtain tens of millions of dollars from the customers to which the bank was not entitled,” the lawsuit reads.
Filed on Monday by the Department of Justice, the lawsuit is just the latest scandal for Wells Fargo. This time around, the bank was incentivizing its sales team to overcharge its customers. Those who were the victims, in this case, were mostly small or medium-sized businesses. And in many cases, the businesses were federally insured financial institutions. The bank, of course, made sure to hide the overcharges.
According to the suit, “As a result of the improper incentives and lack of oversight, a culture developed in which Wells Fargo FX sales specialists were comfortable repeatedly defrauding the bank’s customers. FX sales specialists openly discussed and even celebrated transactions resulting in larger FX spreads than agreed to with customers and transactions generating large FX revenue.”
Wells Fargo Has Been Hit with Other Fines in the Past
This latest transgression from Wells Fargo is just that — the latest. Earlier this month, in fact, the bank had to pay a massive fine — $250 million dollars — after not implementing a “mortgage loss mitigation” program. It was a requirement after a 2018 action filed by the Office of the Comptroller of Currency. Prior to that, the bank had opened millions of accounts in unsuspecting customers’ names.
In total, since 2016, the bank has paid out over $4 billion in penalties. Their latest actions, however, prompted a response from Democratic Massachusetts Senator Elizabeth Warren. She wrote a letter to the Federal Reserve Chair, Jerome H. Powell, asking him to force Wells Fargo into dividing up its personal banking activities with its interests on Wall Street.
“Every new report of scandal and ongoing non-compliance by Wells Fargo represents a giant financial institution squeezing consumers to pad profits for its executives,” she wrote.
Warren also stated that the federal government has the power to help keep the bank’s customers safe. She is strongly encouraging them to use that power.
“The only way these consumers and their bank accounts can be kept safe is through another institution. One whose business model is not dependent on swindling customers for every last penny they can get. The Fed has the power to put consumers first, and it must use it.”