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Los Angeles sues Wells Fargo for fraudulent conduct

The city of Los Angeles has accused Wells Fargo of unfair and fraudulent conduct and sued it for making its employees open unauthorized customer accounts.

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According to the Los Angeles Times, rigid sales quotas at Wells Fargo drove employees to open such accounts and charge ‘bogus’ fees from customers.

The lawsuit has demanded a court order to rectify the alleged wrongdoing, along with penalties amounting to $2,500 for each case and restitution for customers who were affected.

The complaint filed by City Attorney Mike Feuer alleged that the bank’s employees misused the confidential information of customers and often did not close unauthorized accounts even after receiving complaints.

The suit also alleges that some employees illegally took out money from existing accounts to open new accounts.

The Los Angeles Times quoted the lawsuit as saying: "The result is that Wells Fargo has generated a virtual fee-generating machine, through which its customers are harmed, its employees take the blame, and Wells Fargo reaps the profit.

"On the rare occasions when Wells Fargo did take action against its employees for unethical sales conduct, Wells Fargo further victimized its customers by failing to inform them of the breaches, refund fees they were owed, or otherwise remedy the injuries that Wells Fargo and its bankers have caused."

Replying to the lawsuit, Wells Fargo said that a few rogue employees were responsible for the issue, which had either been disciplined or fired.

As cited in Reuters, the bank said it would defend itself against all the allegations.

The latest investigation was the result of a December 2013 Times story which spoke about sales pressure at the Wells Fargo branches across the country.


Image: The lawsuit against the bank suggests that rigid sales quotas droe employees to open bogus accounts. Photo: courtesy of Laimerpramer.