Wells Fargo is at it again.
The scandal-ridden San Francisco-based bank has been caught adding new service fees to the accounts of its customers, without their full awareness or permission.
The bank says justification for the disputed charges is described in the fine print of account holder agreements, but federal bank regulators and U.S. congressional watchdogs say the terms of the agreements are deceptive.
Under renewed pressure, Wells Fargo is promising to make restitution.
The latest controversy echoes the scandal that erupted two years ago when Wells Fargo was caught opening up dummy bank accounts for some 2 million of its customers, raking in monthly fees while allowing its sales agents to earn huge bonuses in the process.
Twelve separate federal investigations plus a full-scale US Senate inquiry – led by none other than Sen. Elizabeth Warren (D-MA) – led to huge penalties as well as the firing of the Wells Fargo president and CEO, eight other senior bank officers and the forced resignation of Wells Fargo’s entire board.
Subsequent investigations revealed that the bank’s “cross-selling” policy was just the tip of the iceberg. It turns out that Wells Fargo had deliberately targeted undocumented Hispanic immigrants and Native Americans as prospective customers on the assumption that they would be less likely to detect the bank’s deceptive sales practices.
The bank had also instituted a fraudulent auto insurance scheme that resulted in thousands of customers getting their vehicles repossessed.
Investigators also discovered that the bank’s board knew about some of these policies as early as 2004 but had failed to investigate them or report them to federal authorities.
Even worse, the bank had fired over 5,000 employees who had tried to blow the whistle on the bank’s deceptive practices. Some of these former workers eventually sued and received settlements.
In the end, Wells Fargo was slapped with the largest fine in U.S. banking history. With profits plummeting and under pressure of dissolution, the bank’s management promised to reform.
But the latest scandal suggests that the bank is still deeply entrenched.
Details emerged in late August with a report in the Capitol Forum, a publication that monitors the banking industry.
The report noted that, Wells Fargo collected hundreds of millions of dollars in service fees on its popular Everyday Checking and Opportunity Checking accounts, without the full knowledge or consent of many account holders who assumed that the accounts were free
Federal regulators have yet to comment publicly on the latest scandal, but U.S. Rep. Katherine Porter (D-CA) wrote to the bank demanding an explanation. In reply, the bank promised that it would make restitution in most of the new cases
Critics of Wells Faso say it’s no surprise that the bank is still stuck in its ways.
Two years ago, Wells Fargo ordered two separate internal investigations to determine how the scandal occurred and to suggest appropriate internal reforms.
But those reports, while pointing to deep flaws in the bank’s corporate organization, were largely window-dressing, critics say.
Wells Fargo employees who have begun organizing internally to push for reform also say they don’t see much evidence of change.
“It doesn’t feel like they’ve changed much of anything,” Meggan Halvorson, a Wells Fargo private mortgage employee for six years, told the Guardian newspaper. “Things put in place don’t seem to be doing much of anything. We still hear [all these] complaints from the customers.”
Halvorson said Wells Fargo management still puts inordinate pressure on sales teams to lean on workers to push through deal closings as quickly as possible. Invariably, this policy leads to deception of consumers over the fees they can expect to pay, she notes.
Some experts say that Wells Fargo’s deceptive sales policies are more typical of the banking industry than many people realize. There’s cut-throat competition among the banks for new customers and within each bank, there’s constant pressure to get customers to add new accounts to their existing accounts.
At least two other banks have admitted pursuing many of the same policies as Wells Fargo but insist that their policies are not “systemic.” Some bank managers and employees may pursue aggressive sales policies, but not as a matter of official bank policy, they say
Halvorson is among several Wells Fargo employees organizing the Committee for Better Banks (CBB), a coalition of bank workers, community groups and labor organizations, to hold Wells Fargo accountable to their frontline workers and customers.
The coalition provides an organizing outlet for bank workers across the banking industry, a sector that has the lowest rate of unionization in the US economy.
But Well Fargo’s management, which agreed to meet with CBB a year ago, abruptly canceled the meeting and has effused to reschedule it.
“This is a typical pattern from Wells Fargo of being untrustworthy, saying one thing and doing another,” said Shannon Bade, an organizer with CBB. “It’s abhorrent how the eighth wealthiest company in the world treats its workers [and customers], all for profit.”