Settlement in Wells Fargo Consumer Fraud Case
If you pay attention to news concerning big banks in America, you might already have heard about a big consumer fraud matter. Wells Fargo, the biggest bank in the United States, “scrambled . . . to contain the fallout from an investigation that found its employees set up 2 million fake accounts that customers didn’t ask for to get bonuses,” according to an article in the Chicago Tribune. Wells Fargo customers did not ask to open a new account, yet they had accounts fraudulently set up in their names by bank employees.
Since the financial crisis began in 2008, most of the big banks in our nation have paid fines and settlements to remedy bad and sometimes fraudulent banking practices. Yet, as the article suggests, the recent issue “involved pervasive misconduct involving thousands of bank employees,” which begs the question of whether fines are sufficient to prevent “bad behavior” among banks and their employees. Moreover, what are banks doing to address the important issue of consumer protection?
Wells Fargo Settlement Emphasizes Harm
After Wells Fargo learned that some of its employees had created approximately two million fraudulent accounts, the bank attempted to make amends by offering apologies. The article indicates that Wells Fargo “took out full-page ads in some newspapers to apologize and promised to change the culture that allowed the scheme to fester.” But in this case, an apology is not sufficient to atone for the harm done. As one member of the Federal Reserve Board made clear, “the banking industry at large isn’t doing enough to prevent unethical behavior among its employees.” And when workers at big banks like Wells Fargo take actions that can result in consumer injuries, generally speaking, we want to see those banks do more than simply offer an apology.
After learning about the possibility of employee wrongdoing at Wells Fargo, the Consumer Financial Protection Bureau (CFPB), along with the Office of the Comptroller of the Currency, launched an investigation. To settle the pending case against it, Wells Fargo agreed last week to a settlement of $185 million. In addition to the settlement money, the bank emphasized how it already “dismissed 5,300 employees for their conduct over the last five years.”
Recompense for Consumers?
While $185 million might sound like a sufficient amount of money, is it really enough to make big banks change methods of oversight and to deter bad behavior in the future? As the article explains, “as part of the settlement, Wells Fargo admitted no wrongdoing and no high-level Wells Fargo executives were singled out for prosecution.” In addition, although $185 million might look like a large number on its own, it is a relatively small percentage of Wells Fargo’s profits from last year, which total more than $20 billion.
Some commentators have voiced concerns about the settlement, suggesting that the fine alone is not sufficient. In addition to fines, individuals at the bank should be held accountable, some consumer advocates suggest. At the same time, however, fines and settlements do allow bank customers to be repaid, in some sense for the harms linked to these acts of consumer fraud.
Contact an Oak Park Consumer Protection Lawyer
If you have been the victim of consumer fraud, you may be able to seek compensation. An experienced consumer protection attorney in Oak Park can help. Contact the Emerson Law Firm today for more information.
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