A culture of high-pressure sales encouraged employees to engage “in unfair, unlawful and fraudulent conduct,” the suit says.
By E. Scott Reckard
May 4, 2015
Rigid sales quotas at Wells Fargo Bank have driven employees to open unauthorized accounts for customers, sticking them with bogus fees and damaging their credit, according to a city of Los Angeles lawsuit that echoes a Times investigation.
The civil complaint, filed Monday in state court in Los Angeles by City Atty. Mike Feuer, says the largest California-based bank encouraged its employees to engage “in unfair, unlawful and fraudulent conduct” through a pervasive culture of high-pressure sales. Employees misused customers’ confidential information and often failed to close unauthorized accounts even when customers complained, the suit alleges.
Some employees went so far as to raid client accounts for money to open additional accounts, the suit alleges.
“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.
Wells has blamed the problems on a few rogue employees who the bank has appropriately disciplined or fired. The city’s investigation, however, found only token efforts by Wells to prevent customer abuses.
“On the rare occasions when Wells Fargo did take action against its employees for unethical sales conduct, Wells Fargo further victimized its customers by failing to inform them of the breaches, refund fees they were owed, or otherwise remedy the injuries that Wells Fargo and its bankers have caused,” according to the suit.
Wells Fargo has long boasted to investors of its unrivaled success in selling additional accounts and services to customers. In a statement, the bank said it would vigorously defend itself against the 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 permits attorneys representing large California cities to seek redress for customers throughout the state. It contends Wells Fargo employees violated state and federal laws by misusing confidential information and by failing to notify customers when their personal data were breached.
“We’re very concerned that consumers be told whenever their information is used for unauthorized purposes,” Feuer said.
The lawsuit seeks a court order shutting down the alleged wrongdoing, along with penalties of up to $2,500 for every violation and restitution for customers who were harmed. If it succeeds in Los Angeles County Superior Court, it would apply to all residents of the county and perhaps to people outside its boundaries, Feuer said.
Feuer said he began investigating in reaction to a December 2013 Times story on sales pressure at Wells Fargo branches across the country. The story relied on about three dozen former and current Wells staffers, along with a review of internal bank documents and lawsuits filed against the bank.
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