The former and many current employees of Wells Fargo (NYSE:WFC) have decided to sue the bank for a total of $2.6 billion, claiming they have been the biggest victims of a plan of opening accounts without seeking customer approval.
Wells Fargo is the third-largest bank in the United States. According to reports, the bank opened 1.5 million deposit accounts without asking for authorization. Many employees of the bank had apparently opened the accounts so they could meet the stiff sales goals. Wells Fargo was apparently pushing employees to sell eight banking products and create a minimum of 10 new accounts every day.
The country was shocked to find out that more than two million such accounts were opened since 2011. But now it seems like the conspiracy ran deeper. Susan Fischer, who is a former branch manager of the bank, says that this tactic could have started way back in 2004. Other former employees agree, saying that it started before 2011.
5,300 employees of the bank have been fired since the scam came out. Most of these employees used to make $12 an hour. Some others have been demoted. But the damage is already done.
No executive of the bank has so far been penalized. Conversely, the CEO actually said that they do not have any plans of withdrawing the bonuses paid for meeting the targets.
The Consumer Financial Protection Bureau ordered a $100 million penalty on September 8th for opening fraudulent credit card and deposit accounts. A $35 million fine was also imposed by the Office of the Comptroller of the Currency. The bank’s CEO, John Stumpf, was asked to step down or face criminal investigation in a recent Senate Banking Committee hearing.
The lawsuit says that the biggest victims of this scam are employees who made an honest attempt of meeting their sales quotas without opening any fraudulent accounts. The bank fired many employees as they could not meet their sell quotas. The suit, filed by Brian Zaghi and Alexander Polonsky accuses Wells Fargo of unlawful business practices, retaliation, failure to pay wages, and wrongful termination.
The 26-page lawsuit also claims that the top executives of Wells Fargo (NYSE:WFC) were aware that unreasonable quotas were causing unethical behaviors. But, they did nothing to curb these practices. As a result, the stock prices went up artificially, and the CEO pocketed the gains.