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So Well Fargo got sued in Federal Court prior to the CFPB taking action. This is some of the language from the Government's Complaint. Apologies in advance for the big block of text.
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Wells Fargo, as part of its sales and growth goals, seeks to increase the average number of products held by its customers from six to eight bank accounts or financial products per account holder — a goal Wells Fargo terms the "Gr-eight" initiative. Id. ¶ 4. The products-per-customer and cross-sell strategies, as well as the goal of eight products per household, are detailed in Wells Fargo's 2014 Annual Report to the U.S. Securities and Exchange Commission. Id. ¶ 21-22. The People allege that Wells Fargo's resulting market dominance has been achieved through unrelenting pressure on its bankers and a strictly enforced quota system for its sales employees, who engage in allegedly abusive and fraudulent tactics to achieve their mandated goals. Id. ¶¶ 5, 23-24. The People allege that daily sales for each branch and employee are reported four times a day, and employees who fail to meet quotas are often reprimanded and admonished to "do whatever it takes" to meet their sales quotas. Id. ¶ 5. The People further allege that the quotas are often unattainable via traditional means because there aren't enough customers that pass through a branch on a daily basis. Id. ¶ 25.
As a consequence, the People allege, Wells Fargo's branch managers and employees have engaged in practices known as "gaming," which include opening and manipulating accounts in deceptive ways, such as omitting signatures or adding additional accounts without customer permission. Id. ¶¶ 5, 28. The People further allege that certain gaming practices have become so pervasive at Wells Fargo that they have been given their own names. Id ¶ 28. "Bundling" refers to the practice of incorrectly informing customers that certain products are available only in packages with other products or accounts, known as a "packed" account, while in fact each product is available on its own. Id ¶¶ 7, 29. In many instances employees are instructed to lie to customers and tell them that each checking account automatically comes with a savings account, credit card, or other products including life insurance and "ExpressSend"1 (described as "an online program that allows customers to send money to foreign countries."). Id ¶ 29. When customers discover an unauthorized account, they are often informed that the account or product came with the authorized accounts automatically. Id ¶ 30. In the case of unauthorized credit cards, customers are advised simply to destroy the card they received, but doing so does not close the credit card account. Id ¶ 31. "Pinning" refers to the practice of having employees personally assign Personal Identification Numbers (often 0000) to customer ATM cards without customer authorization. Id ¶¶ 7, 32. In doing so, employees can then impersonate customers on Wells Fargo's system and enroll those customers in online banking and online bill pay without consent, oftentimes also inputting false generic email addresses in order to complete the transaction. Id ¶ 32. "Sandbagging" refers to Wells Fargo employees' practice of delaying the execution of customer requests to open new accounts until the next sales reporting period, after which additional unauthorized accounts are opened as well as the requested accounts. Id ¶ 7, 33. The People allege that Wells Fargo engages in other gaming tactics, including making misrepresentations to encourage customers to open additional accounts, misrepresenting that additional accounts are fee-free, and targeting "individuals holding Mexican Matriculada Consular cards because the lack of a social Security Number makes it easier to open numerous fraudulent accounts." Id. ¶ 36. The People allege that Wells Fargo knew or should have known about its employees opening unauthorized accounts and, despite this knowledge, Wells Fargo did little, if anything, to stop the "gaming" practices. Id. ¶¶ 41-42.
The People allege that Wells Fargo's gaming practices have caused significant harm to customers, in the form of stress, hardship, and financial losses. Id. ¶ 6. Specifically, customers have had to pay monthly service fees for unauthorized accounts, customer accounts are placed into collection, customers' credit reports are affected, and customers are forced to purchase identity theft protection services to prevent further fraudulent activities. Id. ¶ 38.
The People assert two causes of action against Wells Fargo for violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200, et seq. Id. ¶¶ 54-61. First, they allege that Wells Fargo violated the UCL by engaging in "gaming" practices, including making misrepresentations, misappropriating customer information, committing fraud, and accessing and taking private customer information without permission. Second, the People allege that Wells Fargo violated the UCL by failing to provide customers with notice of any data breach or misuse of their customer information. The People ask for injunctive relief preventing Wells Fargo from engaging in the alleged practices, restitution of interest in any money or property acquired by means of the alleged unlawful practices, civil penalties, and costs. Id. at 19:1-6.
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Wells Fargo, as part of its sales and growth goals, seeks to increase the average number of products held by its customers from six to eight bank accounts or financial products per account holder — a goal Wells Fargo terms the "Gr-eight" initiative. Id. ¶ 4. The products-per-customer and cross-sell strategies, as well as the goal of eight products per household, are detailed in Wells Fargo's 2014 Annual Report to the U.S. Securities and Exchange Commission. Id. ¶ 21-22. The People allege that Wells Fargo's resulting market dominance has been achieved through unrelenting pressure on its bankers and a strictly enforced quota system for its sales employees, who engage in allegedly abusive and fraudulent tactics to achieve their mandated goals. Id. ¶¶ 5, 23-24. The People allege that daily sales for each branch and employee are reported four times a day, and employees who fail to meet quotas are often reprimanded and admonished to "do whatever it takes" to meet their sales quotas. Id. ¶ 5. The People further allege that the quotas are often unattainable via traditional means because there aren't enough customers that pass through a branch on a daily basis. Id. ¶ 25.
As a consequence, the People allege, Wells Fargo's branch managers and employees have engaged in practices known as "gaming," which include opening and manipulating accounts in deceptive ways, such as omitting signatures or adding additional accounts without customer permission. Id. ¶¶ 5, 28. The People further allege that certain gaming practices have become so pervasive at Wells Fargo that they have been given their own names. Id ¶ 28. "Bundling" refers to the practice of incorrectly informing customers that certain products are available only in packages with other products or accounts, known as a "packed" account, while in fact each product is available on its own. Id ¶¶ 7, 29. In many instances employees are instructed to lie to customers and tell them that each checking account automatically comes with a savings account, credit card, or other products including life insurance and "ExpressSend"1 (described as "an online program that allows customers to send money to foreign countries."). Id ¶ 29. When customers discover an unauthorized account, they are often informed that the account or product came with the authorized accounts automatically. Id ¶ 30. In the case of unauthorized credit cards, customers are advised simply to destroy the card they received, but doing so does not close the credit card account. Id ¶ 31. "Pinning" refers to the practice of having employees personally assign Personal Identification Numbers (often 0000) to customer ATM cards without customer authorization. Id ¶¶ 7, 32. In doing so, employees can then impersonate customers on Wells Fargo's system and enroll those customers in online banking and online bill pay without consent, oftentimes also inputting false generic email addresses in order to complete the transaction. Id ¶ 32. "Sandbagging" refers to Wells Fargo employees' practice of delaying the execution of customer requests to open new accounts until the next sales reporting period, after which additional unauthorized accounts are opened as well as the requested accounts. Id ¶ 7, 33. The People allege that Wells Fargo engages in other gaming tactics, including making misrepresentations to encourage customers to open additional accounts, misrepresenting that additional accounts are fee-free, and targeting "individuals holding Mexican Matriculada Consular cards because the lack of a social Security Number makes it easier to open numerous fraudulent accounts." Id. ¶ 36. The People allege that Wells Fargo knew or should have known about its employees opening unauthorized accounts and, despite this knowledge, Wells Fargo did little, if anything, to stop the "gaming" practices. Id. ¶¶ 41-42.
The People allege that Wells Fargo's gaming practices have caused significant harm to customers, in the form of stress, hardship, and financial losses. Id. ¶ 6. Specifically, customers have had to pay monthly service fees for unauthorized accounts, customer accounts are placed into collection, customers' credit reports are affected, and customers are forced to purchase identity theft protection services to prevent further fraudulent activities. Id. ¶ 38.
The People assert two causes of action against Wells Fargo for violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200, et seq. Id. ¶¶ 54-61. First, they allege that Wells Fargo violated the UCL by engaging in "gaming" practices, including making misrepresentations, misappropriating customer information, committing fraud, and accessing and taking private customer information without permission. Second, the People allege that Wells Fargo violated the UCL by failing to provide customers with notice of any data breach or misuse of their customer information. The People ask for injunctive relief preventing Wells Fargo from engaging in the alleged practices, restitution of interest in any money or property acquired by means of the alleged unlawful practices, civil penalties, and costs. Id. at 19:1-6.
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