Since 2011, 5300 now-fired Wells Fargo employees created 2 million phony bank and credit card accounts for existing customers in order to meet sales targets or receive bonuses. These accounts, in turn, generated insufficient funds and overdraft charges, as well as annual fees, for accounts opened without customers’ knowledge or consent. The linked article details the regulatory fines and restitution Wells Fargo will pay as a result.
This article could be used in the classroom to initiate discussion on at least three interesting topics: (1) the difficulty of creating incentive structures aligning the short-term interests of salespeople (meeting targets, making bonuses) with the long-term interests of the firm (gaining and keeping customers), (2) the fragility of customers’ trust in financial institutions (one victim of the phony-accounts scheme tells CNN Money that “[Well Fargo] lost me as a banking customer and I have warned family and friends”), and (3) how toxic corporate (sub)cultures evolve from earnestly-adopted, well-meaning management practices. >>>
LINK: 5,300 Wells Fargo employees fired over 2 million phony accounts (by Matt Egan for CNN Money)
Everyone hates paying bank fees. But imagine paying fees on a ghost account you didn’t even sign up for.
That’s exactly what happened to Wells Fargo customers nationwide.
On Thursday, federal regulators said Wells Fargo employees secretly created millions of unauthorized bank and credit card accounts – without their customers knowing it – since 2011.
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Wells Fargo confirmed to CNNMoney that it had fired 5,300 employees over the last few years related to the shady behavior. Employees went so far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services, the CFPB said.
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“We regret and take responsibility for any instances where customers may have received a product that they did not request,” Wells Fargo said in a statement.
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