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Wells Fargo: The Bank that Cheated its Customers

October 24, 2016
Plain English Version
Photo credit: Peter Foley / Bloomberg

Photo credit: Peter Foley / Bloomberg

The drive to make more money makes people do odd things. The scandal at Wells Fargo Bank is a good example. At the heart of the scandal is profits. The bank made more money when it opened new accounts.

What is the best way to get people to open more bank accounts than they need? First, find people who are least able to understand what you are talking about and what you are doing. It turns out that college students are fair game. Why? They do not have the experience to know what they are signing. Bank representatives went to college campuses. They took applications for new accounts. Young people signed them.  They trusted the older bankers.

Another way is to find people who have money. There is an Indian-owned casino in Arizona. It paid tribal members a dividend four times a year. The members took the money to the local Wells Fargo Bank. The bank staff told them it was wise to open new accounts. One account would be for travel and others would be for grocery shopping or emergencies.

In this case, the bank made money when people opened more accounts than they could keep track of. Confusion occurred. The bank was able to charge fees for non-payments and overdrafts. In other words, the bank profited from the confusion it had created. Depositors complained. The bank advised them to open a new account to clear things up.

Wells Fargo Bank pursued older people. Older people tend to trust bankers. Immigrants were also pursued. The bank told immigrants that they did not need social security numbers to open accounts.

As if all this was not enough. Bank management pressured employees to open new accounts.  Managers would set targets every day. They would single out workers who did not meet goals. Workers quit or were fired. Some employees said the pressure was so intense that it made them ill.

The head of Wells Fargo Bank resigned when the facts of the scandal became public. There is a movement to have all the people who bank at Wells Fargo Bank close their accounts. The date for the mass closing of accounts is November 12, 2016.

In summary, Wells Fargo Bank committed fraud. The bank made millions. It is now paying millions back. People have to be on their guard. Places they trust, such as banks, may not be honest.

Source: The New York Times October 21, 2016

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