Wells Fargo Created Millions of Fake Accounts
Wells Fargo created millions of fake bank accounts under consumer names between 2011 and 2015. By doing so, the Wells Fargo bank was able to meet targeted sales and collect more money in fees from their consumers who were unaware of these unauthorized accounts. It is noted that consumers were signed up for checking accounts and credit cards that they never agreed to open and pay fees on. Wells Fargo has said to have dismissed over 5,000 employees regarding this issue, suggesting this was a widespread problem and ingrained in the banks culture.
Over a million fake accounts are estimated to have been created by employees in consumers names. Employees allegedly created fake email addresses and fake pin numbers to enter these accounts into the system. Roughly a quarter of the accounts created without a consumer consent were credit card accounts. These credit card accounts jointly created a little under a half a million dollars in fees including interest charges, overdraft protection fees and annual fees. Wells Fargo does plan to compensate consumers involved in these fraudulent accounts.
So how does a fraudulent bank account effect a consumer?
A bank account developing fees that are going undetected by the consumer can continuously grow causing the consumer to have to pay more once detected. If never detected, then the consumer is accumulating debt. The unauthorized bank accounts also affect a consumers’ credit score as they are missing payments. A drop in credit could affect a consumers’ ability to take out a loan on items such as a car or mortgage for a home.
Wells Fargo creating unauthorized bank accounts violated the Truth in Lending Act (TILA). TILA expresses that consumers should be made aware of certain information when signing contracts related to credit cards and loans. Wells Fargo employees violated this act by never providing a contract for consumers to sign agreeing to the bank accounts and credit card accounts that were created. More information regarding the TILA can be found in 23 Legal Defenses to Foreclosure: How to Beat the Bank by Troy Doucet.