L.A. Lawsuit Accuses Wells Fargo of Fraud

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A customer enters a Wells Fargo branch in San Francisco in this 2007 photo.  (Justin Sullivan/Getty Images)

Los Angeles City Attorney Mike Feuer has filed an unfair business practices lawsuit against Wells Fargo accusing the bank of victimizing customers "by using pernicious and often illegal sales tactics to maintain high levels of sales of their banking and financial products."

The suit, filed Monday in Los Angeles County Superior Court (embedded below) and first reported in the Los Angeles Times, accuses the bank of setting unrealistically high sales targets for employees, who have responded by opening bank and credit accounts without customer authorization. The action seeks up to $5,000 in fines for each violation of California law and to force the bank to make restitution to customers allegedly victimized in the alleged scheme.

Wells Fargo, based in San Francisco, has denied allegations of systematic abuse and has blamed problems on individual employees the banks says it has disciplined or fired.

"Wells Fargo's culture is focused on the best interests of its customers and creating a supportive, caring and ethical environment for our team members," the bank said in a statement.

The Los Angeles lawsuit alleges, however, that the company's push to sign up customers for as many Wells Fargo services as possible has led to something else: a culture in which employees routinely "game" customers.


Common gaming tactics, the suit says, include "bundling" (telling customers that a certain account or product they seek is only available if they open another account or product), "pinning" (creating unauthorized personal identification numbers for customer accounts and using those PINs to obtain new accounts or services), and "sandbagging" (delaying opening of new accounts until a day most advantageous for filling an employee's sales quota; the suit alleges that many accounts show opening dates of Jan. 1, a bank holiday).

In describing alleged instances of Wells Fargo employees opening unauthorized accounts, the suit says:

In many instances, employees are coached by management to ensure that every checking account is sold with three other products, also known as a "packed" account. Employees were, and are, instructed by management to lie to customers by telling them that each checking account automatically comes with a savings account, credit car, or other products such as life insurance, and/or "Express Send" (an online program that allows customers to send money to foreign countries). ... Customers who complain about receiving credit cards they did not request are advised by Wells Fargo to simply destroy the requested and unauthorized cards. However, simply destroying these unauthorized cards does not close the account nor repair the impact to a customer's credit profile.

The L.A. Times story on the lawsuit includes this tidbit on how the Wells Fargo investigation started:

Feuer said he began investigating in reaction to a December 2013 Times story on sales pressure at Wells Fargo branches across the country. The story relied on about three dozen former and current Wells staffers, along with a review of internal bank documents and lawsuits filed against the bank.

The employees described how staffers, fearing retribution from managers, begged friends and family members to open ghost accounts; opened accounts that they knew customers didn't want; forged signatures on account paperwork; and falsified phone numbers of angry customers so they couldn't be reached for customer satisfaction surveys.

“Your work was the catalyst for ours,” Feuer said in an interview.

This post includes reporting from the Associated Press.