Tag: Wells Fargo

Federal regulators ordered Wells Fargo to pay $3.7 billion in fines and refunds to customers, marking the largest fine to date against the nation’s third largest bank.

The fines come after the Consumer Financial Protection Bureau (CFPB) alleged Wells Fargo has illegally assessed fees and interest charges on auto loans and mortgages, wrongly repossessed customers’ cars and misapplied payments to auto and mortgage loans. The consumer watchdog agency also accused Wells Fargo of charging consumers illegal surprise overdraft fees and adding incorrect charges to checking and savings accounts. 

Wells Fargo, which has spent years trying to rehabilitate itself after a series of scandals tied to its sales practices, will pay a $1.7 billion fine to the CFPB. The remaining $2 billion will go toward compensating more than 16 million customers who were impacted by the “illegal activity,” the agency said Tuesday. 

“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” CFPB Director Rohit Chopra said in a statement.

History of repeated violations

Wells Fargo has been repeatedly sanctioned by U.S. regulators for violating consumer protections dating back to 2016, when bank employees were found to have opened millions of accounts illegally in order to meet unrealistic sales goals. In 2018, Wells Fargo paid a $1 billion penalty to cover widespread consumer law violations. At that time, it was the largest fine to date against a bank for consumer law violations. 

Former CEO Tim Sloan, who once denied the phony accounts were a problem, resigned in 2019 after a punishing appearance before Congress.

Since then, Wells has spent its time saying it’s cleaning up its act, only to be repeatedly fined for additional violations. Wells Fargo has created a consumer advisory group, hired new senior leadership and taken other steps in recent years in hopes of improving its business practices, the company said Tuesday.

“As we have said before, we and our regulators have identified a series of unacceptable practices that we have been working systematically to change and provide customer remediation where warranted,” CEO Charlie Scharf said in a statement Tuesday. 

Wells Fargo said its settlement with the CFPB will remedy “unacceptable practices” that have lingered at the bank for years. 

Regulators: Not enough done

“We have made significant progress over the last three years and are a different company today,” Scharf said.

Regulators made it clear, however, that they believe Wells Fargo had not done enough to clean up its act.

“Put simply: Wells Fargo is a corporate recidivist that puts one out of three Americans at risk for potential harm,” Chopra said.

CFPB officials said Wells Fargo denied thousands of applicants modifications to their home loan over a seven-year period. Those denials caused some customers to lose their home in “wonderful foreclosures,” the agency said. Wells Fargo knew about the issue for years and it didn’t address it until recently, CFPB officials said. 

The agency also said Wells Fargo unlawfully froze more than 1 million customer bank accounts because its automated system flagged some deposits as possibly fraudulent. Wells Fargo could have taken a different action to examine deposits, but instead customers were unable to access their funds for roughly two weeks, the CFPB said. 

Wells Fargo remains under a Federal Reserve order forbidding it from growing any larger until the Fed deems that its corporate culture problems are resolved. The order, enacted in 2018, was expected to last only a year or two.

The Associated Press contributed to this report. 

One of the nation’s largest labor groups is accusing Wells Fargo of trying to deter employees at the financial giant from forming a union.

The Communication Workers of America filed two charges against Wells Fargo this week, alleging that managers threatened and disciplined workers for supporting the organizing effort, which is illegal under federal law. According to one person involved in the drive to unionize Wells Fargo, the country’s fourth-largest bank, a worker in a Utah call center was disciplined for handing out flyers about the union effort in the center’s break room. 

A Wells Fargo manager told the employee to stop distributing the flyers and said the person’s right to work from home could be revoked if the individual refused to comply, the organizer told CBS MoneyWatch, speaking on condition of anonymity to avoid potential retaliation by the company.

It’s illegal for businesses to punish workers for talking about unionizing or trying to collectively improve their conditions in other ways, including comparing notes about work conditions, raising concerns or asking management for changes.

In another charge of unfair labor practices, managers allegedly retaliated against a worker who complained about their pay. The worker received a new assignment but was paid $5 per hour less than the listed wage for the new job, according to the organizer. 

Earlier this summer, the CWA also filed a charge with the National Labor Relations Board alleging that Wells had threatened and disciplined workers in a Minneapolis facility for union activity. 

A spokesperson for the bank said “We are currently reviewing the claims in the NLRB complaint and can’t comment at this time.” 

“Too broken to fix”?

Wells Fargo workers announced the organizing drive last fall, saying that a union would create better working conditions and prevent major ethical breaches of the sort that have dogged Wells Fargo for years.

“I would like to stop seeing Wells Fargo’s name in the news for getting rung up on another scandal or another problem. I want our customers to be happy with us, not generating regulatory action and lawsuits,” Regina Cross, a business system consultant at the bank, told CBS MoneyWatch earlier this year.

A federal probe found that Wells Fargo created millions of phony accounts for customers over a 14-year period and sold insurance products to customers who didn’t need it. Regulators have fined the bank billions over the scandal, which was linked to the company’s dismissal of two CEOs and led the Federal Reserve to ban Wells Fargo from growing until the can prove it’s cleaned up its act. 

In another scandal that rocked the bank, a whistleblower earlier this year alleged that Wells Fargo was subjecting people of color to fake job interviews in order to meet its diversity goals. The revelations, coming two years after CEO Charles Scharf blamed the bank’s lack of Black leadership on a “very limited pool of Black talent,” led the bank to scrap its diversity hiring program altogether.

This week, Bloomberg reported that the federal Consumer Financial Protection Bureau was pushing to fine Wells Fargo $1 billion over its recent scandals. The bank has set aside $2 billion in the most recent quarter for fines and customer restitution stemming from its shenanigans.

Senator Sherrod Brown, an Ohio Democrat who chairs the chamber’s banking committee, suggested at a hearing in September that Wells Fargo was “too broken to fix.”

“CEO after CEO, year after year, scandal after scandal, nothing at Wells Fargo seems to improve,” Brown said.

Better policies, better pay

Pro-union workers at the bank previously told CBS MoneyWatch they wanted more consistent policies, reasonable hours and better pay.

“Particularly with the amount of turnover with the employees right now, our workload has spiked,” said Cross, the bank employee. “It’s one thing after another, and another piles up. You end up putting 60-hour weeks.”

Victor Dutchuk, a loan specialist, said that a union would help prevent work abuses, such as the inflated sales goals that experts pointed to as a key factor in the fake-accounts scandal.

“A lot of these scandals that have occurred are because policies have been implemented arbitrarily by executive management,” he said. “The employees really don’t have an advocate. They don’t have a voice in the workforce.”

The financial sector is one of the least-unionized industries in the U.S., and Wells Fargo’s union would be massive, with as many as 150,000 employees. So far, the bank has opposed the effort, resisting calls from workers and Democrats in Congress to stay neutral during the organizing drive.

A spokesperson for the bank reiterated its position on Thursday. 

“Wells Fargo believes our employees are best served by working directly with the company and its leadership — not a third-party group like a union — to address matters of concern,” the spokesperson said, adding that the bank was “dedicated to investing in our people; advancing diversity, equity and inclusion; and ensuring that Wells Fargo continues to be a great place to work.” 

But union supporters say the bank’s leadership has failed to deliver on those promises and that it’s time for workers to advocate for themselves.

“The employees want a better experience for the customer. They want a more morally centered company, they want better wages, they want policies that make sense,” said Dutchuk, who has worked at Wells Fargo for 25 years.

He added, “These are real problems that exist and that need to be addressed, and we feel the only way these problems can be addressed appropriately is through a unified voice through the employees.”