All the Ripoffs and Scams Wells Fargo Pulled on Customers Over the Years
While over 9 million Americans lost their homes to foreclosure during The Great Recession, some of the country’s richest banks got taxpayer bailouts to stay open. Wells Fargo, by now well known for its culture of fraud, received one of the biggest, amounting to $36 billion in federal aid.
Then Republicans in Congress passed their tax plan in 2017. According to Goldman Sachs, one of the biggest winners of GOP “reform” was Wells Fargo. Goldman estimated Wells Fargo would see an 18% increase in earnings from the plan — most of any bank in America.
So here we go again. While most Americans won’t benefit much from the GOP tax plan, a bank stands to gain $1 billion with no promise of new jobs or any other strings attached. So, as a reminder of its commitment to swindling customers over the years, we rounded up all the scams the bank pulled in the past decades.
Here’s a brief history of Wells Fargo ripping off people in America.
1. Fake accounts, but with real fees attached
Wells Fargo’s most famous scam ended with a bang. After employees were caught opening millions of accounts without customers’ permission, the bank agreed to pay $185 million in fines. The Consumer Financial Protection Bureau (CFPB), City of Los Angeles, and Office of the Comptroller brought down this penalty on the company in late 2016.
It was quite simple. Wells Fargo directed employees to take customers’ money from actual accounts and open new accounts. Everyone knows what happens when you ignore a bank account: Fees pile up fast. Using this technique, Wells Fargo bankers took bonuses and ran up profits by bringing in millions in fees from unsuspecting customers.
2. Wells Fargo’s foreclosure hustle
In 2016, Wells Fargo agreed to pay over $5 billion in order to settle claims of mortgage abuses during the recession. The country’s biggest banks and lenders automatically authorized foreclosures, deceived homeowners on loan changes, and failed to offer any alternatives before people lost their houses. Basically, they forced people out of their homes any way they could after issuing loans the buyers had little chance of affording.
3. The overdraft scam
How do you rack up overdraft fees? Wells Fargo figured it could pull in the most by charging the highest payments first. So, instead of posting purchases of at the drug store, electronics store, and supermarket in the order they happened, Wells Fargo picked the biggest purchase (usually a check) and sent it through. Naturally, this practice led to many more overdrafts and plenty of extra cash. In 2013, the bank had to pay $203 million to settle a lawsuit for this scam.
4. 800,000 fake auto insurance policies, 25,000 car repossessions
Now that we know how Wells Fargo employees pushed fake bank accounts, stories of fake auto insurance sound quite believable. This scam, which took place from 2012 through 2017, involved 800,000 car buyers getting insurance they never wanted or needed as part of a Wells Fargo loan. Since the policies raised costs and extended the car owners, nearly 275,000 borrowers became delinquent, The New York Times reported.
Since many could not pay, Wells Fargo ended up repossessing some 25,000 cars under these wrongful circumstances. While the bank worked to identify how much it had taken from unknowing customers, the early estimate was $73 million. The lives ruined just came with the territory.
5. Illegally seizing service members’ cars
You might say this Wells Fargo scam is the opposite of “Thank you for your service.” Between 2008 and 2015, the bank repossessed over 400 cars of active servicemembers without the legal right to do so. In the case that first caught investigators’ attention, Wells Fargo took the car of an Army National Guardsman about to deploy to Afghanistan. After bank employees sold his car at auction, they still tried to collect more than $10,000 from him.
It turned out Wells Fargo pulled the same illegal scheme on hundreds more servicemembers. When the Justice Department concluded its investigation, the bank had to pay $4.1 million to reimburse the members of the armed forces it had scammed.
6. Preying on elderly and underage Native Americans
In a 17-count federal lawsuit filed in December 2017, The Navajo Nation listed the many ways Wells Fargo targeted elderly and underage Native Americans. As was the case with other scams, this complaint focused on the bank’s thirst for new accounts. According to the Courthouse News Service report, the lawsuit will seek damages for downright predatory activities.
Employees lied to Navajo consumers, telling elderly Navajo citizens who did not speak English that in order to have their checks cashed, they needed to sign up for savings accounts they neither needed nor understood. Wells Fargo representatives stalked local events like basketball games and flea markets to sign up consumers for unnecessary accounts en masse … They opened accounts for underage Navajo citizens, going so far as to falsify birthdates to avoid obtaining necessary parental consent.
In the cash-centric Navajo culture, these tactics had a brutal effect on the population. As for the accusation of faking birthdates for new accounts, we ask: Can you go any lower?
7. Overcharging business owners on credit card fees
This scam dates back to 2005, when retailers sued Wells Fargo and credit card companies for setting high swipe fees on certain cards. By favoring some cards over another, the banks basically forced merchants to penalize customers. After dozens of lawsuits flooded in, the credit card companies and big banks paid out well over $6 billion back to merchants for the charges.
8. Ripping off the government, too
Wells Fargo didn’t just rip off individual Americans over the years; it also took advantage of the biggest customer of all: the U.S. government. In 2016, the bank admitted to deceiving the government to insure risky mortgages between 2001 and 2008. Wells Fargo claimed the loans qualified for Federal Housing Authority (FHA) insurance when they didn’t, leading to massive payouts funded by taxpayers. The damages in the settlement came to a record $1.2 billion.
So why is this Republican Congress giving back the taxpayer money Wells Fargo coaxed from the government in the past? We’ll have to hear straight from them. If you look at it the way most people will, it seems like rewarding a company with a long record of scams for nothing else than corporate profits. Maybe Americans will send Congress their feedback in the 2018 elections.
Check out The Cheat Sheet on Facebook!