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According to CNBC, the third-largest US bank Wells Fargo will have to pay $575 million in a settlement with the attorneys general from New Jersey and other states that were investigating the bank for opening fake accounts without the knowledge of customers, and for systematically scamming its own customers for 15 years.
Wells Fargo admitted that it opened more than 3.5 million unauthorized bank and credit card accounts in customers’ names between 2002 and 2017.
The bank then illegally charged its clients for various financial services products they never signed up for, such as life-insurance policies and collateral protection insurance on millions of auto loans.
State Attorney General Gurbir Grewal said in a statement that Wells Fargo’s corporate culture led to repeated breaches of its customers' trust.
'This settlement should send a message to all financial institutions that they need to take steps to avoid similar consumer protection violations, because we stand ready to hold the financial industry accountable.'
California Attorney General Xavier Becerra called the bank’s behavior disgraceful.
'Wells Fargo customers entrusted their bank with their livelihood, their dreams, and their savings for the future', Becerra said.
'Instead of safeguarding its customers, Wells Fargo exploited them, signing them up for products - from bank accounts to insurance - that they never wanted. This is an incredible breach of trust that threatens not only the customers who depended on Wells Fargo, but confidence in our banking system.'
Wells Fargo to Pay States About $575 Million to Settle Customer Harm Claims; Latest settlement covers retail sales practices and auto-loan, mortgage charges https://t.co/xrY4jaAXy5 pic.twitter.com/xKveGD6eKD
— Barry Ritholtz (@ritholtz) December 28, 2018
As Chepicap previously reported, the Wells Fargo bank banned its customers from using their credits cards to buy cryptocurrencies in June 2018.
The American multinational financial services company cited the multiple risks associated with this volatile investment.
'Customers can no longer use their Wells Fargo credit cards to purchase cryptocurrency. We are doing this in order to be consistent across the Wells Fargo enterprise due to the multiple risks associated with this volatile investment.'
Bitcoin too risky for clients, says Wells Fargo
— 2019 (@Benwaterz) December 30, 2018
“Customers can no longer use their Wells Fargo credit cards to purchase cryptocurrency, “We’re doing this in order to be consistent across the enterprise due to the multiple risks associated with this volatile investment.”
The irony is painful.
As Anthony "Pomp" Pompliano states on Twitter 'Long Bitcoin. Short the Bankers'.
Wells Fargo is paying over $500 million to stop all 50 states from questioning their nefarious activities.
— Pomp 🌪 (@APompliano) December 28, 2018
Small penalty given the bank made $88 Billion in revenue last year.
Long Bitcoin, Short the Bankers!
One Twitter user hits the nail on the head: Crypto might not yet be perfect, but banks have been corrupt since the middle ages.
Today: Wells Fargo pays $575m
— Faris Oweis (@faris_says) December 30, 2018
Tomorrow: Wells Fargo figures out how to extract $575m from existing customers.#crypto and #blockchain may not be perfect (yet), but banks have sucked since the Middle Ages. https://t.co/hZe8ooyofY
Wells Fargo MO: If you don’t invest with us, we will just use you your name, and open an account without your consent. Corporate fraud at a whole new level.
— Strongertogether (@2Trumplethinski) December 31, 2018
The WSJ reports that Wells Fargo is doing the final settlement for opening fake bank accounts for thousands of customers. That's fine, but why isn't anyone going to prison?
— onedollar juana (@onedollarjuana) December 31, 2018
Elizabeth Warren: John Stumpf eventually lost his job as Wells Fargo’s CEO. But far too often, politicians run our government for the rich and powerful instead of holding them accountable. It's time to end Washington corruption and start building a gover… https://t.co/bMrw9jMopV
— OurRevSpain (@OurRevSpain) December 31, 2018
Wells Fargo to Pay States About $575 Million to Settle Customer Harm Claims; Latest settlement covers retail sales practices and auto-loan, mortgage charges https://t.co/xrY4jaAXy5 pic.twitter.com/xKveGD6eKD
— Barry Ritholtz (@ritholtz) December 28, 2018
This latest banking scandal is yet another example spotlighting the widespread failures of centralized financial institutions. Time to change this!