The Wells Fargo bogus account problem is about 70 percent worse than the bank originally declared in 2016. Last September, federal regulators revealed that Wells Fargo had created about 2 million unauthorized bank and credit card accounts that customers weren’t even aware of. The findings came from a consulting firm hired by Wells Fargo. The scandal stems largely from CEO John Stumpf pushing his employees to live by the slogan “Eight is Great,” as in eight is the number of accounts they should push customers to have (such as checking, savings, credit card, personal loan, mortgage, and car loan).
But instead of cross-selling customers, many employees just created fake accounts that customers weren’t aware of. The sales culture was so toxic that employees reported nausea, panic attacks, and insomnia caused by work anxiety. One banker even claimed she drank hand sanitizer to cope with the pressure to engage in shady sales tactics.
After the scandal was uncovered by authorities, Wells Fargo blamed bad employees and fired 5,300 people.
On Thursday, Wells Fargo said it had found an additional 1.4 million more fake accounts, putting the total number of potentially fraudulent accounts at around 3.5 million. The previous analysis only went as far back as 2011, whereas a recent investigation included activity between 2009 and 2015.
The original findings showed that 130,000 of the fake accounts created unnecessary fees for customers. The new report updates that number to 190,000 accounts. The analysis also revealed that 528,000 of Wells Fargo users were potentially enrolled in online bill pay without authorization.
“We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank,” Wells Fargo CEO Tim Sloan said in a statement. “Through this expanded review, as well as the class action settlement, free mediation services, and ongoing outreach and complaint resolution, we’ve cast a wide net to reach customers and address their remaining concerns.”
Wells Fargo has promised to pay $6.1 million in refunds to customers who were given fake accounts. It claimed it will pay $910,000 to refund those affected from unauthorized online bill pay enrollment.
[CNN Money, CNBC, Wells Fargo]