California and federal regulators fined Wells Fargo a combined $185 million on Thursday, alleging the bank's employees illegally opened millions of unauthorized accounts for their customers in order to meet aggressive sales goals.
"Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses," said Consumer Financial Protection Bureau Director Richard Cordray. "Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed. Today's action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences."
The CFPB said Wells Fargo sales staff opened more than 2 million bank and credit card accounts that may have not been authorized by customers. Money in customers' accounts were transferred to these new accounts without authorization. Debit cards were issued and activated, as well as PINs created, without telling customers.
In some cases, Wells Fargo employees even created fake email addresses to sign up customers for online banking services.
"It's sad … no matter what the cause," said San Diego State University finance professor emeritus Dr. Tony Cherin.
Cherin said with current banking regulations in place, incidents like this are few and far between.
"You don't see it that often, but when it does happen, a big issue is made of it," he said.
Team 10 asked Cherin if he thinks a situation like this would have customers leaving a bank like Wells Fargo.
"You know, I really don't think so," he said.
Roughly 5,300 employees at Wells Fargo were fired in connection with this behavior, according to Los Angeles City Attorney's Office.
Wells Fargo officials told Team 10 that on an annual basis, more than 100,000 team members worked in their branches, and the number terminated represents about one percent of this workforce over the five-year period.
Moving forward, Cherin has this advice for consumers: "When you get your bank statement, take a pretty careful look at it."
In a statement to Team 10, Wells Fargo said: "Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us. Wells Fargo is committed to putting our customers' interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request."