Wells Fargo supervisors drove employees to open unauthorized accounts for customers, improperly charging them fees and wrongly reporting them to credit agencies — all part of a “fee-generating machine” riddled with fraud, according to a lawsuit filed by the city of Los Angeles against the San Francisco-based banking giant.
The civil complaint was filed Monday in state court in Los Angeles by City Attorney Mike Feuer.
The suit is full of sweeping allegations of employee misconduct, including misusing customers’ personal information to open unwanted accounts, failing to close the unauthorized accounts despite complaints from customers, and using funds in client accounts to open additional accounts.
“The result is that Wells Fargo has generated a virtual fee-generating machine, through which its customers are harmed, its employees take the blame, and Wells Fargo reaps the profit,” the lawsuit alleges.
The lawsuit also claims that Wells Fargo further harmed customers by placing their accounts in collections when those accounts didn’t contain enough funds to cover the the bogus bank-generated fees. Customer would then receive negative marks on their credit reports.
The city’s investigation into the bank’s unfair practices found that Wells Fargo – which previously blamed the issues on an isolated group of employees – took little action to protect consumers. The investigation followed a December 2013 Los Angeles Times article that focused on sales pressure at Wells Fargo branches across the country. The story was based on interviews with three dozen former and current Wells staffers, along with a review of internal bank documents and other lawsuits filed against the bank.
In a statement, the bank said it would defend itself against the L.A. lawsuit’s allegations.
“Wells Fargo’s culture is focused on the best interests of its customers and creating a supportive, caring and ethical environment for our team members,” the bank said. “This includes training, audits and processes that work together to support our Vision & Values and our commitment to customers receiving only the products and services they need and will benefit from.”
The suit was filed under an unfair-business-practices law that allows attorneys representing large California cities to seek redress for customers throughout the state.The suit asserts that Wells Fargo employees violated state and federal laws by misusing confidential information and by failing to notify customers when their personal data were breached.