LOS ANGELES (CNS) – The city of Los Angeles sued Wells Fargo, alleging that strict sales quotas at the bank have pushed employees to open unauthorized accounts for customers, sticking them with bogus fees and damaging their credit, the City Attorney’s Office announced.
“Consumers should be entitled to expect that major financial institutions will treat them fairly,” said City Attorney Mike Feuer, whose office filed the lawsuit Monday in Los Angeles Superior Court. “Our lawsuit alleges that in Wells Fargo’s push for growth the bank often elevated profit over its customers’ legal rights.”
Feuer’s lawsuit alleges the bank boasts about the number of accounts it opens and has a goal of having at least six accounts per customer, with plans to increase that to eight accounts per customer.
He also accused the bank of using “gaming” practices aimed at extracting fees from customers and never informing customers that the accounts were being opened.
A Wells Fargo customer, business owner Frank Ahn, said the bank opened more than 15 accounts without his permission over the last four years, even though he only needed one for his Lake Balboa area convenience store.
Ahn said as soon as he opened an account with Wells Fargo, he began receiving regular calls each month from bank employees soliciting him to open more accounts. Despite declining, he learned through the bank’s website that three accounts were created anyway, Ahn said.
After confronting Wells Fargo about the unauthorized accounts, bank employees assured him there would be no charges on the accounts — he just needed to deposit $100 in each account to avoid fees, he said.
Ahn said he is a “really nice person” and “just let this stuff go,” so he kept the accounts and deposited the specified amounts. But the bank still charged him $15 to $20 fees, with employees later telling him he also needed to set up a savings account for each of the existing accounts to avoid penalties.
“I just feel like every time I go to a (Wells Fargo) branch, it’s a battle with them,” he said.
Wells Fargo has previously blamed the problems on a few rogue employees who the bank has appropriately disciplined, but the city’s investigation allegedly found only token efforts by Wells to prevent customer abuses. Wells Fargo officials said the bank intends to “rigorously defend” against the allegations.
“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,” according to a statement from the bank. “This includes training, audits and processes that work together to support our `Vision & Values’ and our commitment to customers receiving only the products and services they need and will benefit from.”
Feuer declined to say how many people have come forward so far, but he said those who have include both customers and employees of the bank.
The lawsuit alleges the largest bank based in California encouraged its employees to engage “in unfair, unlawful and fraudulent conduct through a pervasive culture of high-pressure sales. Employees misused customers’ confidential information and often failed to close unauthorized accounts even when customers complained, the suit alleges.
Some employees went so far as to raid client accounts for money to open additional accounts, according to the suit.
The lawsuit is seeking an injunction barring the practices, and seeks penalties of up to $2,500 for each violation, according to the City Attorney’s Office. Feuer urged members of the public to check their own Wells Fargo accounts to see if any unauthorized checking, savings or other types of accounts have been created, or if unexplained fees have been charged.
Feuer said any incidents of unauthorized accounts can be reported to his hotline at (213) 978-3393.