SAN FRANCISCO (KGO) --Wells Fargo has agreed to pay a fine of $185 million to customers, federal,and local agencies after employees allegedly opened accounts, moved money from accounts and more without customers' consent.
It's a major breach of trust for the San Francisco-based bank. It impacts customers all over the state. The penalty not only requires Wells Fargo to pay up a lot of money, but it also has to follow strict guidelines and agree to oversight.
It's a land mark verdict that found Wells Fargo employees also opened up credit cards without consent.
The motive was to satisfy aggressive sales goals. "This is a major victory for consumers. Consumers have to be able to trust their bank. Consumers should never be taken advantage of by their bank," Los Angeles attorney Mike Feuer said.
As part of the settlement, Wells Fargo agrees to have a third party review unsecured credit cards and some retail deposit accounts dating back to 2011.
A total of $2.6 million will be refunded to customers. The average refund will be about $25. Internally, the bank promises the termination of some managers and team members.
There will be enhanced training, monitoring and controls.
Customers will see more documentation once credit card applications are filled out and the bank will send a confirmation email to customers within one hour of opening an account.
The bank released a statement saying: "At Wells Fargo, when we make mistakes we are open about it, we take responsibility, and we take action."
"This is a fundamental breach of customer trust," Santa Clara University Professor Jo-Ellen Pozner said.
Pozner is a professor of organizational misconduct and ethics. She thinks Wells Fargo set itself up to fail by implementing an unhealthy sales and compensation structure. "If we're telling people to be aggressive through our goal-setting system, then they are going to be aggressive. What we pay people for is what they do for us and so this was really probably foreseeable," Pozner said.
The bank has already fired 5,300 employees.