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According to the city of Los Angeles’ lawsuit against Wells Fargo & Co., the bank is guilty of opening unwanted accounts under clients names, then charging them with unwarranted fees.

Lawsuit Against Wells Fargo

The lawsuit, filed by City Atty. Mike Feuer, alleges that the bank’s culture of high-pressure sales set unrealistic quotas for its employees, thus spurring and forcing employees to engage in fraudulent practices to hit company set goals and keep their jobs.

Numerous customers and current as well as former employees from Florida to Montana and throughout California have unleashed an outpouring of anger towards the nation’s third-largest bank, recounting aggressive sales tactics that snared unaware clients. Even after customers noticed problems they found it almost impossible to correct the mistakes, thus leaving them unable to recover all the fraudulent charges.

Feuer announced the lawsuit on Tuesday. “In its push for growth, Wells Fargo often elevated its profits over the legal rights of its customers,” he said.

Illegal Actions by Wells Fargo

Business owner, and customer at the bank, Ken Wallman figures he was one of the luckier victims of the bank’s practices.

Two years ago, Wallman opened a checking account at a Wells Fargo branch in Marina del Rey. To get it opened he was asked to sign several documents. Six months later he found out he actually had a dozen additional accounts that were open under his name that he had never authorized. And some of those accounts, that he was completely unaware of, were dinged with monthly fees.

Wallman made numerous attempts to fix the problem. Eventually he was able to have the bank “weed out the erroneous accounts and reverse some fees.” He’s sure that some of the charges though slipped through “and cost me money.”

What to Look for if You’re Concerned About Your Wells Fargo Account

If you have a bank account at Wells Fargo, city officials and former Wells Fargo employees are advising you scrutinize your bank statements and pay extra attention to any online accounts. You should also be wary of credit and debit cards that appear in your mail. These could indicate an employee has opened an account in an attempt to reach his or her sales quotas.

Things to ask, according to Feuer: “Have accounts that they have closed remained open? Have they received debit or credit cards they didn’t ask for? Have they incurred charges on any of these accounts that they have not authorized?”

Pay Attention to Online Bank Statements

Former Wells Fargo manager in Southern California, Maged Nashid, advised customers to pay close attention to their online bank statements. Nashid, alleges he was fired from the company in retaliation for questioning practices addressed in Feuer’s lawsuit. The fraudulent accounts opened by Wells Fargo employees are usually attached to bogus mailing addresses. Because of this, if an authorized account had been opened in your name, chances are you would not have received a mailed statement about the account.

“The client would never be aware of it,” said Feuer. “The only way to actually find out about it is through the online banking.”

Review Bank Statements

Nashid also advised that clients review bank statements to look for suspicious withdrawals ranging from $25 to $100. These amounts are the same as those required to open a Wells Fargo checking or savings account. According to him, employees of the bank would use a client’s savings to open the fraudulent accounts under fake names as they sought to meet their quotas.

Wells Fargo’s Reputation

According to G. Michael Moebs, who heads industry research firm Moebs Services Inc, the allegations of the lawsuit could damage the bank’s reputation and are most likely already are being looked into by regulators.

“This is a fundamental reputation problem with any depository in the world. You don’t want this happening,” Moebs said.

Regulatory officials at the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau declined to comment.

Wells Fargo declined to comment on specific instances but, in a statement said,”We will vigorously defend ourselves against these 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 went on to say it provides training, audits and processes “that work together to support … our commitment to customers receiving only the products and services they need and will benefit from.”


Feuer launched his investigation following a December 2013 Los Angeles Times report that interviewed close to three dozen current and former bank employees in addition to a review of internal bank documents and lawsuits that had previously been filed against Wells Fargo.

In that report, employees described that staffers often begged friends and family to open up “ghost” accounts because they feared disciplinary action from managers. The same employees also said they opened accounts under customers names that didn’t want the accounts, while also forging signatures on paperwork and falsifying phone numbers of angry customers so that they could not be contacted by the bank for customer satisfaction surveys.

Fee Income

Wells Fargo has long boasted of its unrivaled success when it comes to selling additional savings and checking accounts and services to its customers. Last year, almost 26% of the company’s revenue was from income it received as fees This fee income includes fees taken on credit and debit card accounts, trusts, and investments.

According to Moebs, fee income is a crucial part of banking revenue. “You’re looking at well over 85% of all depositories — banks, credit unions and thrifts — which, if they didn’t have fee income, could easily go belly-up,” he said.

Damaging Credit Scores

Feuer and consumer advocates warned that the tactics that are outlined in the lawsuit could not only directly harm consumers checking and savings accounts, but also damage their credit scores. The suit alleges that Wells Fargo put customers into collection when fees on the unauthorized accounts went unpaid.

According to Norma P. Garcia at advocacy group Consumers Union, publisher of Consumer Reports magazine, these hits to credit scores can cause problems for borrowers down the line when they go to get a mortgage or car loan. As a result, they could end up paying higher interest rates because of the low credit scores. “If you don’t pay on time you risk a lot,” she said. “There is a lot going on behind the scenes that could cost you money.”

Garcia said consumers that have noticed unauthorized accounts or activity should immediately call their financial institution to cancel the transactions and demand refunds for any fraudulent charges.

Reason for Fraudulent Activity

Feuer’s lawsuit alleges that the reason for the fraudulent banking practices was the result of an unrealistic sales quota system enforced by constant – up to four times a day – monitoring of each employee. According to the lawsuit, “Managers constantly hound, berate, demean and threaten employees to meet these unreachable quotas.”

Randall A. Marquis has written about bank fraud as an editor at an industry publication. According to him, fraudulent accounts by Wells Fargo employees were twice opened for his 79-year-old grandmother. The accounts took money from her existing account at the bank. “It was not fun to see her crying and saying, ‘I want them to leave me alone.'”

Victim of Bank Fraud

If you feel you have been a victim of bank fraud, you should immediately contact a lawyer. They will be able to help you build a case while also conducting a thorough investigation of the alleged charges. Carefully checking your accounts daily should help you ensure that no fraudulent activity has occurred. You’ll want to remedy the situation as soon as possible to avoid additional fees that can damage your credit score.

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