The first lawsuit has been brought against Wells Fargo by customers after it was discovered that the bank collected fees for millions of unauthorized accounts.
The proposed class action suit, filed in U.S. District Court in Utah on Friday, accuses the bank of fraud, negligence, invasion of privacy, and breach of contract. The three plaintiffs are seeking compensation to cover damages tied to anxiety, emotional distress, and identity theft, as well as for legal fees.
The bank was busted opening millions of phony bank and credit card accounts for customers over the last five years. The fake accounts were a way for the bank to earn extra fees from unsuspecting customers, as well as artificially boosting its sales numbers.
The lawsuit states that Wells Fargo managers and bankers partook in unethical techniques to improve sales figures. The bank has an average of six accounts per customer, but was aiming to have eight. Plus, the bank is being blamed for pressuring bankers into duplicitous practices though quotas and unrelenting monitoring.
Wells Fargo has not only fired 5,300 employees in connection to the scam, it has agreed to pay $185 million in fines and refund $5 million to customers. And, because of the fallout from the scandal, Wells Fargo is no longer America's Most Valuable Bank -- that distinction now belongs to Chase -- and it's reputation has been badly tarnished in the process.
But it gets worse: The Department of Justice has opened its own investigation and has issued subpoenas to the bank. And on Friday, the U.S. House Financial Services Committee stated it would launch an investigation into the bank and hold a hearing in later September. Wells Fargo has confirmed its CEO, John Stumpf, will testify.
You can rest assured that this scandal gives further ammunition to those who say Wells Fargo -- like Chase, Bank of America, and so many other huge banks -- is too big to fail and too difficult to manage. I frequently receive letters from them urging me to sign up for one of their credit cards. I was never interested in such promotions and now, even less so.
Wells Fargo deserves what's coming to them. Consumers expect that companies protect their personal information. I expect that moving forward there will be safeguards in place to prevent this from ever happening again.
What's your take on the scandal? Are you a Wells Fargo customer? Has this changed your perspective on the company?