Wells Fargo says 3.5 million accounts involved in scandal

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Wells Fargo & Co. potentially opened 3.5 million accounts in customers’ names without those customers’ knowledge or consent — far more than the 2.1 million that were previously identified, according to an independent review, the San Francisco bank said Thursday. The bank said the previously announced third-party analysis looked at a larger time frame than the original review.

The expanded review looked at more than 165 million retail banking accounts opened between January 2009 and September 2016. The initial analysis reviewed 93.5 million current and former customer accounts opened between May 2011 and mid-2015.

“To rebuild trust and to build a better Wells Fargo, our first priority is to make things right for our customers,” Wells Fargo Chief Executive Tim Sloan said in a statement. “The completion of this expanded third-party analysis is an important milestone.

Of those 3.5 million potentially unauthorized consumer and small business accounts, about 190,000 accounts incurred fees and charges, up from the 130,000 accounts that had been previously identified.

Wells Fargo said it would provide $2.8 million in further refunds and credits, in addition to the $3.3 million announced after the first review.

Wells Fargo’s practices were uncovered in a 2013 Los Angeles Times story that found overbearing sales pressure was leading bank employees to create accounts for customers without their knowledge or authorization.

The Los Angeles city attorney sued the bank in 2015, and Wells Fargo agreed Sept. 8, 2016, to pay $185 million to regulators.

This spring, in the process of negotiating a $142-million settlement with the bank, plaintiffs’ attorneys told a federal judge in San Francisco that they estimated perhaps 3.5 million unauthorized accounts were created between 2002 and last year.

U.S. District Judge Vince Chhabria has given the deal preliminary approval, but will have to give a final sign-off on the deal later this year before payments to customers are made.

The bank already agreed to increase the payout once before, boosting it to $142 million from $110 million after an internal bank report showed unauthorized accounts had been a problem as long ago as 2002, years earlier than previously reported.

Wells Fargo had known for weeks that its review released Thursday would turn up many more potentially unauthorized accounts than the 2.1 million it identified last year.

Analysts said they had expected the number to grow, and the bank said in a regulatory filing this month that the review “may lead to a significant increase in the identified number of potentially unauthorized accounts.”

Last week, Sloan sent a letter to employees warning that there would be a wave of news coverage following the announcement of the new figures.

The results of our reviews will generate news headlines,” Sloan said, “but even as we face this renewed coverage, the best thing we can do is stay focused on fixing problems, making things right for customers, and building a better, stronger Wells Fargo.”

Sloan also emphasized in the letter — as bank representatives have for the past year — that the number of potentially unauthorized accounts is probably larger than the number of genuinely unauthorized accounts.

The bank identified potentially unauthorized accounts based on how accounts were used. For instance, if a checking account was opened with a minimum deposit, and the deposit was withdrawn soon after, that account would be flagged as potentially unauthorized, Sloan said.

The announcement comes just a few weeks after the bank announced that its chairman, Stephen Sanger, and two other long-serving board members would step down, marking the highest-profile departures since former Chairman and Chief Executive John Stumpf resigned last year.

Source: latimes.com

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