What the Fargo? Why it’s time to break up with your bank

By | September 13th, 2016

When the news broke Thursday that Wells Fargo had defrauded its customers by opening millions of fake accounts in customers’ names to meet aggressive sales goals, it came as a blow to many.

The Consumer Financial Protection Bureau (CFPB) led the investigation and slapped the banking giant with a $100 million fine, the largest penalty since the CFPB was established in 2011. In addition to the fine, Wells Fargo will pay $35 million to the Office of the Comptroller of the Currency, as well as $50 million to the city of Los Angeles, whose lawsuit against the bank helped uncover the scope of the scam. The bank says it has already begun refunding customers the fees they were charged for “products they may not have requested,” totaling $2.6 million in aggregate.

My relationship with Wells Fargo is older than my marriage. But this latest scandal proves that even the biggest, most profitable banks are not above deceiving their own customers. This time, they’ve crossed a line. Yes, intentionally taking steps to defraud customers is where I say goodbye and take my banking business elsewhere. I’m breaking up with Wells Fargo.

What we know

In addition to the fines paid through the settlement, we know that Wells Fargo terminated more than 5,300 employees, who reportedly worked in an environment where incredible pressure existed to meet sales goals. Those employees opened secret accounts using the identities and funds of real customers to meet those goals, in an effort to be rewarded with bonuses. Sometimes, employees opened online banking accounts using fake email addresses and PIN numbers, all without the customer’s knowledge or consent. When Wells Fargo opened unauthorized accounts for its customers, these accounts often generated fees and penalties, so customers were being nickel and dimed for accounts they didn’t even know they had.

What we don’t know

When the news emerged, I contacted Wells Fargo’s corporate headquarters to seek comment on this situation. Specifically, I asked whether affected customers would be notified. I also wanted to know what measures would be taken to ensure something like this never happens again.

A Wells Fargo spokesperson provided a lengthy response attempting to downplay the scope of the problem, which has actually been going on for years. While Wells Fargo wants you to know that it hired a third party consulting firm to identify which accounts going back to 2011 were unauthorized, it has been reported that the outside audit didn’t begin until sometime after the bank was sued by the City of Los Angeles in May 2015.

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Wells Fargo wants us to keep in mind that accounts receiving refunds represented less than one percent of the accounts audited, so when viewed as a percentage of its overall business, only a small fraction of its customers were affected. When viewed any other way, the opening of an estimated 1.5 million deposit accounts without consent and processing of an additional 525,000 credit card applications by employees is significant.

In other words, knowing that many more customers were unaffected than affected doesn’t give me any comfort. In reality, the lack of rhyme or reason to which customers were selected means that any one of its customers was a potential target at any given time. The behavior is egregious and contemptible.

The bank announced that customers entitled to refunds have already received them, and that most refunds average $25. A spokesperson told me customers receiving refunds were informed either by letter or on their statement.

That’s right — the bank said “or,” not “and.” That means if you’re like me, a customer who has opted out of paper statements and reviews her account information online, you’d have to actually click on the statement PDF each month and detect a refund, somehow putting two and two together about what the refund signifies.

“If we learn of any additional customers that require refunds,” the spokesperson added, “we will make those refunds promptly.”

That statement implies that the bank may not have identified all the dummy accounts that “may not have been requested” by customers.

Taken in its entirety, the bank has shifted the burden back to the customer to ensure that you have no unwanted accounts, or that you never had any unwanted accounts. I’m as thorough as the next person, but taking the time to go back through 60 months of statements for multiple accounts is more time than I’m willing to spend investigating the matter. I’ll simply ask the question when I visit Wells Fargo for the last time — to close all accounts.

A relentless sales culture

The response from Wells Fargo’s spokesperson placed a strong emphasis on the new training programs the company has instituted to address both ethics and transparency in customer service. That’s good. They should do that.


But let’s consider the likelihood of successfully changing corporate culture. There’s no way 5,300 employees came up with the idea to open fake accounts in isolation. Tellers and their managers had to collude to pull this off, and had to train newcomers in the dark art of deception.

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As a Wells Fargo customer, for years I made twice-monthly deposits at the drive up window of a branch near my office. And for years, tellers frequently offered a credit card or money market account through the drive up speaker, which I politely declined every time. Being offered a credit card was so common that if an offer wasn’t extended, I felt like I had gotten away with something.

Then one day in March 2013, an intruder broke into my home while I was at work. Although I was 20 minutes away at my office, suspicious online activity alerted me to the fact that someone was using my home computer. The sheriff’s department confirmed that there was a break-in at my house and told me to come home immediately.

During that long drive home, my mind was racing, not knowing what to expect when I got there. I wanted some sense of control in a frightening and uncertain situation, so I called Wells Fargo to let them know what was going on. I imagined they would surely know what to do and could freeze my accounts, protecting my money.

When I dialed the toll-free number on the back of my debit card, the Wells Fargo representative reviewed the balances on my accounts, which thankfully were as expected. She told me she could cancel my debit card number, but that any additional changes to the accounts would have to take place in a branch the next morning.

Without missing a beat, the representative then asked me if she could take a moment of my time to review products and services that I qualify for. “Um … No … Now’s not a good time,” was likely my polite reaction to her request. But now that I’ve recovered from the traumatic burglary, and in today’s current context, I’d like to once and for all loudly proclaim how inappropriate and insensitive the proposed sales pitch was. Suffice it to say, crisis management is not one of the company’s strengths.

When I went to the branch the next morning to close all accounts and transfer funds to new accounts, the banker was sympathetic and caring. In fact, she even offered me identity theft protection, which I declined. I didn’t turn down identity theft protection because I didn’t think it was needed, but because at the time all South Carolina residents were covered by state-financed identity theft protection following a data breach at the Department of Revenue. In truth, Wells Fargo was offering me a product I didn’t need. Besides, Wells Fargo’s identity theft protection now appears to be something akin to the fox guarding the hen house.

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The CFPB is needed more than ever

The CFPB, created in 2011 to protect consumers from unfair practices by banks, lenders and other financial companies, has been met with strong criticism from Republicans. Just last year, Sen. Ted Cruz (R-TX) publicly shared his desire to shut down the CFPB, calling it a “runaway agency that does little to protect consumers.” Republican presidential candidate Donald Trump agrees with Cruz, saying he would “abolish” the agency, allowing the free market to reign. Democratic presidential candidate Hillary Clinton applauded the CFPB’s action, saying in a statement that the case is “a stark reminder of why we need a strong consumer watchdog to safeguard against unfair and deceptive practices.”

For its part, when speaking of the record $100 million fine levied against Wells Fargo, CFPB Director Richard Cordray says it “reflects the severity of these violations, the breadth of the unfair and abusive practices, and how seriously we take them.”

Wells Fargo can do what it will to try to minimize the fallout from its own actions. The same banks that caused the economic crash eight years ago and received billions in government bailouts are now bigger than ever before. Unchecked, Wells Fargo scammed its customers in an outrageous fashion until the CFPB investigated the bank’s practices and put an end to it.

Despite engaging in practices that are shockingly deceptive, fraudulent, unfair and illegal, there have been no arrests made in connection with this investigation. Although no senior leadership has been fired, Wells Fargo’s head of community banking, Carrie Tolstedt, stepped down in July citing “personal” reasons, taking $125 million with her. The bank will pay its $185 million in fines. While $185 million is a big number, for a bank with $1.9 trillion in assets, this fine is small enough to be considered the cost of doing business.

I wish them well. From now on, they simply won’t have my business to chase after.

Can a bank that has opened millions of fake accounts ever regain your trust?

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  • Jeff W.

    Long before the crash of 2008, I have been a firm believer in credit unions and my belief in them grows after incident after incident is reported.

    CUs seem to provide better service than banks and the fees they charge (if any) are far better than what a bank provides. Some CUs are full service and offer almost everything a bank does. Never been disappointed.

    They are also non-profit organizations, so they do not answer to stockholders, but to membership.

  • Mike

    If it were easy and convenient to move my mortgage from Wells Fargo I would in a minute.

    Unfortunately, Wells isn’t the only bank that does the aggressive sales pitch. All the big conglomerate banks do it. My sister worked for a local community bank that was bought out by M&T. She just quit after a year under M&T, as the sales pressure for a branch manager was relentless, and they were expected to go after new sales with EVERY encounter with a customer. Its unreal.

  • Regina Litman

    I’ve been with Wells Fargo since they took over Wachovia in 2011. I opened a Blue Ribbon branded account with Philadelphia National Bank (PNB) on November 21, 1986, two days after moving to the area. I liked the features of their Blue Ribbon account, which included, among other things, a free safe deposit box of their smallest size and no PNB-imposed ATM fees at other banks (and it would still be about a decade before banks would begin charging non-customers for using their ATMs, so effectively, this meant no ATM fees, period, at the time).

    The Blue Ribbon perks that were most important to me stayed in place through name and/or ownership changes to First Pennsylvania, Core States, First Union, and Wachovia, although I had to switch from a purely ATM card to a debit card with the transition to First Union to avoid per-transaction point-of-sale fees in stores.

    When the switch to Wells Fargo was made, the materials we received were vague as to whether I would still be able to use a non-Wells Fargo ATM without incurring a fee from them. Here in the Philadelphia area, we have a convenience store chain, Wawa, which does not charge a surcharge to use their instore ATMs. I use them a lot. A Wachovia manager eventually told me I’d still have this perk.

    A few months later, I was suddenly charged twice for using Wawa ATMs. I went storming into my local branch demanding an explanation. I was told that my account type no longer gave me this perk. But I was also told that I now qualified for a different account that does have this perk. The transition was made, and they even credited back those two ATM fees.

    But later that year, I suddenly got a bill for my safe deposit box, something I’d never gotten before in my 25 years of this evolving bank relationship. I didn’t do enough due diligence at the time of the account switch to realize that I would be losing one perk at the to get back another. What I pay annually for my small safe deposit box is far more than I’d pay to use the Wawa ATMs, which I would probably now be avoiding. I wonder how much that employee got for swirching me over that time.

    Later, I reached an age that qualified me for a senior account. This time, I was more prepared as they listed the perks and lower balance requirements to get them. I asked about no ATM fees. Sorry, they weren’t part of the plan.

    I’m not sure I’m ready yet to shop around for a new primary bank for the first time in almost 30 years. I’ll have to think about it

  • James

    Not just credit unions — but I use cash whenever I can. Not ATM cards, not credit cards — cash. I’d rather the merchant get a little more than give the banks a share of each transaction.

  • Jeff W.

    I understand the anguish. It took my wife more than 15 years of me asking to switch from a mega bank to the credit union. She didn’t want to go through the hassle of switching. (Wasn’t pushy about asking, this was not a battle worth waging. Just during tax time when I needed easier access to the financials.)

    The proverbial straw was not me, but a notice that there would now be a monthly maintenance fee — this from a long term account holder that was also part of an employer perk.

    But that is how they get you. Have multiple accounts or relationships and you are less likely to leave.

  • MF

    With the financial crash of nearly a decade ago, I moved my assets out of B of A. The local credi union, Golden One, had a great billboard slogan – ” Bail Out of Your Bank ” – cute and effective.

  • redragtopstl

    For many years, we have done our banking either through locally-owned banks or credit unions. They know us, we know them, and nobody gets hosed.

    I remember being with my husband several years ago, after his mother passed away, and seeing him having to jump through numerous hoops to close or transfer ownership of accounts she had at a couple of the large regional/national banks (US Bank, Regions). Not pretty.

  • MarkKelling

    Aggressive sales pitch is one thing, outright fraud is another. Sure, I get annoyed when the bank teller asks if I need a credit card, loan, investment account, whatever (since I have one of everything with them anyway!), but I understand it is part of their job to ask. On the other hand, I would never expect anyone to just open an account in my name at my bank just so they can meet their sales quotas — this is the same as identity theft!

  • Mike

    You’re 100% right, of course – but lets take this route – what if the employees did this in response to the sales pressure received from upper management? It’s no less wrong, but some people will do things to attempt to alleviate pressure from upper management.

  • MarkKelling

    What is the worst about this is the manager of the group that had all of these employees let go for the fraud they were committing is set to retire a the end of this year and receive $145 MILLION for all of the years her group met all of its goals. Are they freeking blind?? Or just completely ignorant?? How can you give someone that amount of money when it is obvious that the only way her direct reports make their sales goals was through opening fraudulent accounts. Whether or not she knew exactly what was going on, she had to know there was something going on!

    I’m sure the opening of fraudulent accounts started as a way for desperate employees trying to keep their jobs to meet their sales quotas. Pay at Wells and many other large banks for front line lower level employees has a large component based on sales even for those who aren’t hired as sales people. With a base pay barely above minimum wage, the bonus incentives you receive from new accounts makes the difference in paying your bills or not for the month. Employees can also be fired for not meeting their goals. You can be the best teller ever and still lose your job because you don’t have enough new accounts credited to you. This is one of the reasons I left my previous job at a big bank (not Wells), I just didn’t think it was fair to the employees.

    Wells is the same bank that back in the 90’s started charging their own customers $5 to come into a branch and do business. They wanted to reduce staffing costs by pushing everyone to the internet or phone. Even things you had to do in person got you charged $5. They stopped that once they started losing customers to other banks who did not charge a similar fee.

  • MarkKelling

    Agreed. Especially when upper management says “open x number of new accounts by thinned of the month or you are fired”. Desperation causes honest people to do dishonest things they can justify to themselves as necessary.

  • Rebecca

    I worked in banking, and I too left the smaller, community based bank I worked for shortly after they were acquired by a large bank. I didn’t work in the branch, but worked in security/compliance in the office. The last straw for me was when I got in trouble for talking to a customer that had gone into the branch and had some questions the manager couldn’t answer. The manager knew me, so she called and asked me to help her customer, which I did. And apparently that was a problem, not the content of what I said, but simply the fact that I took the time to speak to her, rather than push it on someone else that didn’t know the answer.

  • RBXChas

    We do the vast majority of our business banking and a small amount of personal banking at a local bank. The branch we mainly use is a stone’s throw from our office, so we know the staff well and have gotten great service as a result. Even at other branches, service is still very good. It was recently bought out by a larger bank, so we’ll see how things evolve. If things start to turn sour, we’ll likely be switching to a credit union. We do most of our personal banking through USAA but use the local bank for convenience, such as when we need to deposit cash.

  • mbods2002

    I’ve been with Wachovia/Wells Fargo for, gosh over 30 years also. I’m checking out the small, local banks in my area. I really think this is the “straw that broke the camel’s back” for me. How CAN I trust them after this?

  • technomage1

    I have a Wells Fargo account and I think they’re just okay. I’m not thrilled, but suntrust was a lot worse – they’d sales call me, until I finally went into my local branch and asked them to tell corporate not to contact me with sales calls. Call me when there may be a problem, but otherwise, no. Wells Fargo does pitch hard when you go in but at least doesn’t call or email.

    I had a PNC account since 1979 – well, a BankOhio, then National City, then PNC account – I closed 2 years back when they wouldn’t work with me to unlock my online account and I was stationed overseas. I sent them copies of my drivers license, all the info they asked for, and was still refused. Never again. I cleared the account by writing a check and closed it.

    I will need a new bank next year due to retiring and plan to go with a local bank back home.

  • Think about this…Wells Fargo fired 5,300 folks…the size of the ENTIRE population of Solvang, CA.

    THAT is the story… Enough people to have a population bigger than MOST towns and some cities…wiped off the payroll…due to systemic fraud.

    THAT IS THE STORY.

  • ArizonaRoadWarrior

    The problem is the failure of the government to let these mega banks to fail…let the market determine the winners and losers.
    Whoever cut the deals for the bail outs should have required these mega banks to be broken up (i.e. how the government broke up AT&T).

  • Carol Molloy

    I will not defend Wells Fargo, as the scale of their deception suggests a major and egregious breakdown in ethics and controls, which should have detected this activity and caused an internal response to terminate it. Whether or not they will be able to claw back any of the compensation paid to Carrie Tolsted depends on several factors, but would certainly be the morally correct decision.

    Banks cannot survive without their client’s confidence. I agree that banks have brought many of their difficulties other own heads. When greed overcomes sound business practice, in any industry, problems emerge. At the same time, the majority of individuals working in this field aren’t paid 6-figure or more salaries, and truly care about providing meaningful service to their clientele. The actions of a few tarnish the entire profession, unfortunately.

    I don’t expect people to have much sympathy for those of us in the banking profession. It comes with the territory. It feels unjust to have to pay for services related to one’s own money, but that’s how banks make money, and are able to provide the mortgages that facilitate home ownership, and the transaction capabilities that allow people to buy and sell goods. The absence of banks would be a huge problem.

    All big banks are not villainous. As with any product, it is wise to shop around. Ask the bank for a copy of its deposit handbook (a mandatory document), their privacy policy, and current interest rates on mortgage and home equity products. Or download these from their websites. Visit a branch, and observe the climate and the self service options. Choosing a bank is a big decision, and it’s worth being thoughtful in one’s approach to selecting it.

    A truly good banker is going to take the time to review your accounts and help you find options to reduce or avoid fees, without attempting to upsell. There is a time and place for introducing new products to a client, and frankly, sometimes those products may fit a need the client has, i.e. earn more interest, finance something at a lower cost, make transacting more convenient.

    If you experience poor service, it is wise to register your complaint with a supervisor. The CFPB requires that banks maintain a complaints database, and demonstrate resolution within a fairly small window. These databases are audited by the CFPB, and banks are held accountable under Unfair Deceptive and Abusive Account Practices regulations. Clearly, the system is only as good as the people conforming to it, as the Wells scenario illustrates. Nonetheless, the majority of institutions do not operate in that fashion.

    Hopefully these comments have offered some meaningful perspective.

  • joycexyz

    Why is it that the company officers step away with a king’s ransom when lesser folk would (or do) wind up in jail?

  • joycexyz

    The problem starts at the top, but somehow those at the top are shielded from responsibility.

  • James

    The biggest problem with local banks is that they get acquired. I started with Caifronai Federal (acquiared by Citicorp in 2002), wen to another, acquired in 2005 by US Bank, then Washington Mutual, acquired in 2008 by Chase….

    Credit Unions are the only option.

  • jim6555

    Your comments do offer meaningful perspective. However, due to years of abuse by commercial banks, I have decided only to do business with credit unions. The CU where I have my account offers every service that I need. Last year, I refinanced my home. The new 15 year mortgage has a fixed interest rate of 2.875%. At the time, local commercial banks were quoting between 3.5 and 4%. My credit union is a member of a nationwide ATM network with over 50,000 locations. My daughter lives over 2000 miles from my home. When I visit her, there are six fee-free ATM’s within two miles of her home.

  • Byron Cooper

    I had an account with Wells Fargo since they took over Wachovia in 2008. Wachovia itself went through multiple iterations, First Union, Security National Bank and so on. I had this account for 30 years. Through all these changes the customer service was excellent until Wells Fargo took over. They fired all of the people who had given my wife and I personal service and it was never the same again.

  • ArizonaRoadWarrior

    I won’t be surprised if Wells Fargo is violating the Patriot Act.

  • Tricia K

    The level of receipt on this issue is astounding. It certainly strikes me as totally wrong that the CEO got to walk away with her golden parachute while 5300 employees got fired. I seriously doubt that all 5300 of them came up with this idea on their own. I’m willing to bet at least a few went along against their better judgement, while knowing their jobs were on the line of they didn’t. Maybe I shouldn’t be anymore, but stories like this disappoint me on a very deep level. I come from a place of believing that most people are kind and decent, and when given the chance will do the right thing. Clearly 5300+1, did not.

  • Tricia K

    US Bank does it here as well. It’s irritating.

  • Byron Cooper

    I think the type of bank you need depends on your individual circumstances. I travel a lot and it is very important to me to use a bank that waives international transaction fees which usually add 3% to the cost of purchases. Waiver of ATM fees is another important feature. We are using Citibank because they gave us a great mortgage rate that was lower than anyone else and it helped to have an account with them. Even though interest rates on checking are minuscule, you can sometimes get something. I think it also depends on the credit union if you are using one. I looked at reviews for credit unions in DC and they varied, just like banks.

  • SierraRose 49

    Same issue we had when my Mom passed away in 2008 with her Bank of America accounts. And her trust and other documents were in order. One jaw dropping experience we had with them is when we deposited a cashier’s check from a LOCAL credit union when we closed that account and they told us that would have to put a 20-day hold on the funds. What? It takes 20 days to verify funds?

  • SierraRose 49

    Yep, our mortgage is with US Bank and they frequently pitch us about refinancing our current loan – when we are way, way underwater? R U serious, US Bank?

  • SierraRose 49

    Wells Fargo CEO John Stumpf says he holds himself accountable for the alleged abusive account opening practices for his company but does not plan to resign. “I think the best thing I could do right now is lead this company, and lead this company forward,” he told Jim Cramer in an interview on “Mad Money” on Tuesday.

  • Deplorable Diva Linda

    I understand. Our banking history goes back to Georgia Railroad Bank, which was bought by First Union, then Wachovia, then Wells Fargo. We haven’t had any problems with Wells Fargo and will likely stick with them. When reps at the local branch bring up our account records they sit up and take notice and we are treated with respect. They bend over backwards to keep our personal and business accounts.

  • Deplorable Diva Linda

    Our experience was just the opposite, When Wells Fargo took over we saw no change in local customer service from Wachovia (and First Union and Georgia Railroad Bank before that). What we did see was far superior online banking options.

  • Tricia K

    Do you qualify for the government program that was designed to help people like you? It might be worth checking out. Our mortgage is with another large bank. We bought our house about 6 years ago and refinanced it about two years later to shorten the length of the mortgage down to a 15 year instead of a 20. I am constantly getting offers from our mortgage holder telling me I can refinance to a lower rate and save about $4,000 a year over my current mortgage. And while that sounds like a good thing on the surface, it actually adds about 3 1/2 years back on to the mortgage because it would be for fifteen years from the date of refinance. I did the math and figured out their so-called savings would cost us several thousand dollars over the life of the loan. Both our mortgage bank and our regular bank are constantly offering us the opportunity to refinance or get a home equity loan among other things.

  • SierraRose 49

    Thanks Tricia. We had checked into the gov. program and as I remember we did not qualify. However, you got my wheels spinning and we are checking a few other options.

  • SierraRose 49

    You’ve raised a very good point. When we’ve opened new accounts we have had to submit photo IDs. How did Wells Fargo bypass this requirement? Did they keep their customers’ photo IDs on file so they could open new accounts. New accounts usually require signatures. Did Wells Fargo bypass that requirement or forge signatures? And do the 5,300-plus people who were fired have a cause of action – like a class action suit? Do they get unemployment benefits?

  • ArizonaRoadWarrior

    I have a long term relationship with our bank; all of the branch employees know me, etc. but I still have to show my IDs and etc. when opening up new accounts.

  • SierraRose 49

    Same here. And they ask to see our IDs when we cash a check.

  • Carrie

    It was sleazy and against the law. And don’t make excuses for the employees or the company.

    I know the pressure of being in sales, but there is a line you don’t cross. WF crossed it. What is the quality of an employee or company that invents accounts?

    Banks are one of the last businesses that need a sterling business record. If they were my bank, I could never trust them again.

  • LonnieC

    Simply stating facts is not politicizing. We can make our own conclusions. Sorry if you don’t like where they go.

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