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Wells Fargo is facing a fine of $185 million courtesy of the Consumer Finance Protection Bureau. For the past five years, thousands of Wells Fargo employees collectively participated in a scam to systemically defraud and corruption its customers. Banking company employees created new accounts for customers using fake e-mail addresses, issued credit cards without customer consent, and set up up sham accounts. In many cases, customers simply became aware of the scheme when they received credit or debit cards they hadn't applied for, or were striking by overage charges on an account they didn't know existed.

The issues at Wells Fargo are tied to a company culture that values cantankerous-selling products across the entire range of services that the bank offers. Already accept a checking account? Wells Fargo wants to sell you a credit card or a home mortgage. Need a car? Wells Fargo wants to handle your auto loan. This strategy has been widely described equally fundamental to the bank'south success and a major component of its earning strategy. Unfortunately, these strengths were kept afloat by internal reward programs and quota targets that pressured sales assembly to "notice" new sign-ups and accounts whether the customers in question knew what they were being signed upward for or not.

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The company'south stock took a small hit, but investors aren't bothered by the revelations.

Currently, it's estimated Wells Fargo employees created 565,000 faux credit cards, and at least some people may have been damaged by overage charges they didn't know existed. Shahriar Jabbari sued Wells Fargo terminal yr, according to the New York Times, afterwards seven accounts were created in his proper noun and without his consent. Monthly fees associated with those accounts were assessed, which resulted in unpaid overage charges that were and so reported to financial institutions equally unpaid debts. The end result was that Mr. Jabbari concluded up existence chased by debt collectors for debts he had not agreed to incur.

The plan, as practiced by several thousand Wells Fargo employees, seems to have been to sign up new customers for an business relationship, motion a pocket-size amount of money into that account, and then close the account and transfer funds back several days later on. This mode, the rep gets to count the business relationship opening towards their own goals and the consumer, theoretically, is none the wiser.

Wells Fargo has let go of a staggering 5,300 employees related to the scheme and will pay $35 meg to the Role of the Comptroller of the Currency and $l 1000000 to Los Angeles (LA city attorneys worked on the case). The stock has just moved minimally since news of the scandal broke — despite its size, the fine amount is basically a rounding error for the depository financial institution.

This last point underscores the difficulty of holding huge corporations accountable for their actions. Wells Fargo'due south aggressive cross-selling strategy led to this problem, only it's also credited with earning the bank billions in revenue. For a company like Wells Fargo, an occasional fine for blatant fraud and corruption is nothing more than a cost of doing business concern — easily outweighed by the tremendous profits the bank has earned from its cantankerous-selling strategy.