Banks sometimes receive a bad rap for shady practices like issuing overdraft fees or predatory loans. Imagine if your bank went a step further by opening fake bank and credit card accounts in your name so it could improve sales quotas.
The Consumer Financial Protection Bureau fined Wells Fargo $100 million after it was discovered bank employees had opened two million bank accounts for customers without their permission. This includes 565,000 fake credit card accounts that had not been authorized by customers. Wells Fargo will also pay another $85 million in penalties to the Office of the Comptroller of the Currency and the City of Los Angeles. Customers will also receive refunds.
An investigation revealed 14,000 of the fake accounts accrued $400,000 in fees. For some customers, these fees and credit inquiries could have long-term financial consequences.
What Could Happen to Affected Wells Fargo Customers?
Lower credit scores: Each time you apply for a credit card, it requires a hard inquiry of your credit history. Hard inquiries can lower your credit score for up to two years! It is possible that the 565,000 Wells Fargo members who were signed up for credit cards by employees had their credit ratings damaged.
Overdraft fees: Some of these accounts opened for customers would accrue monthly maintenance fees. Depending how much money was in the accounts, customers could have been subjected to overdraft fees! If a customer were to have an overdrafted checking account shut down and sent to collections, they could possibly be reported to ChexSystems. Having a ChexSystems record would make it nearly impossible for these customers to open checking accounts anywhere else for years.
What do you think is an appropriate punishment for Wells Fargo? What should happen to customers who were hit with fees and had their credit scores hurt?