In a class-action suit filed Friday against Wells Fargo, three Utah residents charged that the bank engaged in “knowing theft” and fraud. The suit is the latest blow to Wells Fargo amid fallout over the opening of more than two million credit card and bank accounts without permission from its customers.
Innocents caught up in #WellsFargo dragnet will have their careers permanent blighted. Watch for a class action on wrongful dismissals.
— Bob Krause (@KrauseForIowa) September 20, 2016
Wells Fargo Lawsuit
Plaintiffs in the suit are seeking damages and class-action status for up to a million of Wells Fargo’s customers. The Consumer Financial Protection Bureau (CFPB) already hit the bank with a $100 million fine on September 8. Other fines came from the County and City of Los Angeles ($50 million) and the Office of the Comptroller of the Currency ($35 million). Fargo has since taken action, firing about 5,300 employees in response to the allegations.
Wells Fargo released a statement about the accounts situation, saying it will take responsibility “for any instances where customers may have received a product that they did not request.” Officials at the bank have also stated that to their knowledge all affected customers have received refunds. They downplayed the employee firings, saying the terminations represented only about a percent of their total workforce. The bank said that to date it has refunded about $2.6 million to customers in the accounts mess. A percentage of the unauthorized accounts created roughly $2 million in fees for the bank. A portion of the false credit card accounts created about $400,000 in fees. That’s according to a CFPB document.
Potential Class Action Suit the Tip of the Iceberg
A possible Wells Fargo class action suit is just the tip of the iceberg for the bank. A committee from the U.S. House of Representatives has announced that the launch of an investigation into the situation. The FBI and federal prosecutors have begun another investigation. The U.S. Senate has also scheduled a hearing into the matter.
Not a New Situation
The problems with Wells Fargo unauthorized accounts that sparked the possible class action suit are far from new. The U.S. Senate has referenced reports that customers and employees blew the whistle on the bank’s activities years ago. Reports indicate that the alleged practice of opening unasked-for accounts in customer names and then charging them fees went on for years. Some in the government have questioned why it took so long to call the bank to account for questionable practices. As early as 2010, a U.S. District Court Judge found that Wells Fargo had manipulated the processing of its customers’ debit card purchases to artificially inflate overdraft fees.