You may recall an earlier blog, posted 10/03/2016, entitled “Clawbacks Rarely Draw Blood,” about John Stumpf, former CEO of Wells Fargo Bank, whose bank board required him to forfeit the $41 million they had awarded him, plus his bonus, for having allowed his employees to cheat their customers. The forfeiture is known as a clawback.
As much as Wells Fargo would like to close the chapter on this scandal, those who are investigating it are saying “Not so fast!” as new and ugly evidence of the bank’s malfeasance emerges.
So the story, as told in today’s New York Times, continues :
By STACY COWLEY, October 22, 2016
Mexican immigrants who speak little English. Older adults with memory problems. College students opening their first bank accounts. Small-business owners with several lines of credit.
These were some of the customers whom bankers at Wells Fargo, trying to meet steep sales goals and avoid being fired, targeted for unauthorized or unnecessary accounts, according to legal filings and statements from former bank employees.
“The analogy I use was that it was like lions hunting zebras,” said Kevin Pham, a former Wells Fargo employee in San Jose, Calif., who saw it happening at the branch where he worked. “They would look for the weakest, the ones that would put up the least resistance.”
Wells Fargo would like to close the chapter on the sham account scandal, saying it has changed its policies, replaced its chief executive and refunded $2.6 million to customers. But lawmakers and regulators say they will not let it go that quickly, and emerging evidence that some victims were among the bank’s most vulnerable customers has given them fresh ammunition. . .
At a branch in Scottsdale, Ariz., members of a local Native American community would arrive like clockwork every three months with checks for their share of the community’s casino revenue. It was then, said Ricky M. Hansen Jr., a former branch manager there, that some bankers would try to dupe them into opening unnecessary accounts laden with fees.
In California, it was people with identification cards issued by Mexican consulates. The absence of a Social Security number made it simpler for Wells Fargo employees to open fraudulent accounts in those customers’ names. Wells Fargo is one of the few major banks to permit accounts to be opened without Social Security numbers.
And in Illinois, one former teller described watching in frustration as older customers fell prey.
“We had customers of all ages, but the elderly ones would at times be targeted, because they don’t ask many questions about fees and such,” Brandi Baker, who worked at a branch in Galesburg, Ill., said in an interview. . .
In the Los Angeles area, for instance, college campuses were considered prime spots for employees seeking to rack up new accounts because younger customers had a tendency to trust a banker’s advice.
Athena McDaniel-Watkins, a former teller who worked in and around Los Angeles, said a banker she worked with would take stacks of forms with him on campus visits and encourage busy students to sign the blank papers — he would fill them out later, he told the students.
“So the customer essentially handed the banker a blank check,” Ms. McDaniel-Watkins said. “The banker was then able to list as many accounts under that application as he wanted — or, in many cases, as many as he needed to hit sales goals for that day.”
Steven Curtis, who also worked at several Wells Fargo branches in the Los Angeles area, said that when college students showed up asking for overdraft fees to be waived, bankers would sometimes tell them they could do so only by closing their account and opening a batch of new ones.
Stage coach hold ups in the old days
The practices in California were also described in a lawsuit the Los Angeles city attorney filed against Wells Fargo in 2015. Among the complaints was that employees specifically sought out Mexican citizens because their identity documents were easier to misuse.
If customers complained, Wells Fargo employees advised them “to ignore the unauthorized fees and letters from collection agencies because the lack of a Social Security number means the debt will not affect them,” the lawsuit said. . .
Current and former Wells Fargo employees say the problems continued well into this year.
Ashlie Storms, a former banker at a Wells Fargo branch in West Milford, N.J., said she quit her job in August, soon after learning that a banker at another branch had manipulated the accounts of one of Ms. Storms’s regular customers, an older woman with memory issues.
The woman had come to deposit a large check, only to have the banker use it to open new checking and savings accounts without her approval. The next day, the customer and her daughters arrived at Ms. Storms’s branch, confused about where her money had gone and why she could not gain access to it.
“What should have been a five-minute conversation turned into a three-hour complaint to corporate from the customer about the actions this banker decided to take without the customer’s consent,” Ms. Storms said. “The banker was a top producer for our region, always receiving recognition from management for her sales.”
The dynamics varied from branch to branch, former employees said in interviews. There was no systematic corporate policy or ethos of targeting specific groups of customers.
“Bankers wanted the quickest, easiest sale — the low-hanging fruit,” said Mr. Pham, the former Wells Fargo banker in San Jose. “The extreme pressure forced people into it.”
In some places, demographic patterns created distinct openings.
In the Phoenix area, managers gleefully looked forward to the days when the Salt River Pima-Maricopa Indian Community made its quarterly per capita distribution payments, said Mr. Hansen, the former branch manager in Scottsdale.
Members of the Native American community would head straight to the bank with their checks, and employees would encourage them to use the money to open new accounts. . .
Mr. Hansen learned that one enterprising branch manager had invented “per capita day packages,” jammed with five or more bank accounts. Customers would be told that they needed separate accounts for such purposes as traveling, grocery shopping and saving for an emergency.
“They would deposit their money and get hit with fees like crazy, because they got confused about what account they were using,” Mr. Hansen said. “They would use the wrong debit card and overdraw their travel account, and then when they came back three months later, they would lose hundreds of dollars from their next check paying off those fees. . .”