The 4 ways Wells Fargo employees were ripping off customers, earning the bank a $185M fine

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Wells Fargo is on the hook for $185 million in fines after settling charges brought by the Consumer Financial Protection Bureau of widespread abusive and illegal sales practices dating back to the beginning of 2011.

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The company, which is the largest US bank by market capitalization, has fired some 5,300 employees in connection with the scandal, in which workers quietly took advantage of customers in an effort to reap rewards and game an employee-incentive program.

How exactly were employees ripping off account holders? There were four basic ways, according to the CFPB:

  1. Opening new deposit accounts and transferring customer money: As many as 1.5 million accounts may have been opened in the name of customers without their knowledge or permission. Employees would transfer customer money into these new accounts, subsequently generating $2 million in overdraft and other related fees.
  2. Applying for credit cards: Employees applied for about 565,000 credit cards on behalf of unwitting customers, who were then on the hook for annual fees, late fees, and interest charges that amounted to a little over $400,000.
  3. Activating new debit cards: Without permission, workers requested and issued new debit cards to account holders, often creating new PIN numbers for them in the process.
  4. Using bogus email addresses to sign people up for services: To enroll customers in online banking services without their knowledge, Wells Fargo employees would use email addresses unrelated to the account holder.

The end game for employees was to sell enough new products and open enough new accounts to meet company goals and trigger compensation bonuses. Adding insult to injury, the illegal employee behavior was often unprofitable for the Wells Fargo.

The good news for consumers: Wells Fargo is in the process of paying out some $2.5 million to reimburse affected customers, and account holders don't need to take any action to get their money. The bank will send notices to those who were taken advantage of explaining what happened and how much they're being refunded.

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