Nov 09, 2016

If you sometimes tune into the news, you might have heard of a story about Wells Fargo. One of America’s biggest banks is under fire for illegal activity on a massive scale. But what is it exactly? If you don’t know the ins and outs of the story and want a general overview without overly complicated financial lingo, then you’re in the right place.

Let’s attempt to deconstruct the story behind the scam and tell you all about what really happened.

Unauthorized activity

Imagine one fine day, as you’re going through your finances, you suddenly notice that you were charged for insufficient funds in your account. “What?” you ask yourself, “How could that be?” You have plenty of funds in your account. But then you discover that the fee is for another account you own, an account you didn’t authorize and didn’t even know existed. Imagine how it would feel.

That’s how a lot of Wells Fargo customers felt when they took a good look at their bank or credit statements. And that’s just one of many issues the customers faced. There were reports of accounts being opened that the customers didn’t request and credit cards being issued that the customers never wanted.

Unachievable sales targets

What was the cause of all this mess?

The problem originated from the monthly sales target the bank assigned its staff. The targets were so high that they were almost impossible to achieve. For instance, consider this fact: At one point, the bank decided that it wanted to reach the target of eight financial products, per customer, on average. Imagine that!

Imagine having up to eight bank accounts or four accounts and four credit cards. It’s insane, right? What’s even more insane is how the employees were pushed. There are reports of the employees being harassed, intimidated, and even losing their jobs over not being able to achieve their sales targets. Sometimes, the administration would call the sales department up to four times a day just to check on the progress.

The scam proceeds

The sales staff eventually ran out of friends and family they could convince to open bank accounts they didn’t need. And then they were pushed by the management to use the private details of existing customers to open bank accounts and issue credit cards in their name without their authorization.

The bankers then moved some money from the original account to the ghost account as proof of financial activity. The customers were then charged with unwarranted fees. The employees even created fake PIN numbers and email addresses to illegally enroll customers in their online banking services.

The bigger picture

The scale and the scope of this scam are absolutely mind-boggling. It had been going on since 2011 and was just recently discovered. The bank created more than 1.5 million of these ghost accounts without the authorization of the customers. In addition to that, around 565,443 credit card accounts were created with the consent of the customers.

As soon as the media got the whiff of the whole affair, the bank went ahead and fired more than 5,300 employees. But the big question still remains. Was this the fault of the employees or was it just a move by the bank to escape legal consequences?

No one may ever know.

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