Wells Fargo pays $3B for fake accounts scandal

Charlie Scharf, new Wells Fargo’s CEO, promised to clean up the mess and restore the bank’s reputation

Wells Fargo

Wells Fargo pays $3B for fake accounts scandal. Source: shutterstock.com

According to LearnBonds, Wells Fargo has accepted to pay $3 billion as a settlement over a scandal involving fake accounts’ creation. Its workers were forced to provide millions of products or accounts to customers without agreement or using false pretenses.

In most cases, employees misused customers’ identities. Furthermore, they created false records to meet the unrealistic aims of the company.

This case illustrates a complete failure of leadership at multiple levels within the bank
Nick Hanna, United States Attorney

A $3 billion fine will take care of the three charges against Wells Fargo, including a $500 million penalty SEC will distribute to investors.

The ruling on the case paid attention to the unconventional activities of Wells Fargo for the past 15 years. Wells Fargo agreed that from 1998, it started focusing more on its sales volume, relying on annual sales growth. For instance, the “cross-sell strategy” was one of the basic strategies aimed to sell additional financial products to existing customers.

Besides, Wells Fargo’s volume-based sales model pressurized the employees to sell a huge amount of products to existing customers. The workers offered fake accounts and made unrealistic promises to businesses for loans as well.

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