Wells Fargo has agreed to pay a $190 million settlement to the federal government after it admitted that thousands of employees opened fraudulent and unauthorized accounts for customers.
So the big question is how does no one go to jail for this?
This is a Reality Check you won’t see anywhere else.
Wells Fargo is paying this massive $190 million fine and has fired 5,300 employees.
So what was taking place? In two words: massive fraud.
1.5 million checking accounts and half a million credit cards of fake accounts were set up using real customers’ names in order for more than 5,000 employees to hit lofty sales goals. In addition to the fact that they were overcharged overdraft and maintenance fees, some customers also dealt with significant hits to their credit scores as a result of not staying current on accounts they didn’t even know they had.
Since 2011, Wells Fargo says $2.6 million has been refunded to customers, who received an average of $25. Out of the $190 million fine, only $5 million will go to victims. The remaining $185 million will go to the federal government.
Wells Fargo has also said that firings included managers, and that it was making investments “in enhanced team-member training and monitoring and controls.”
So how is it that while employees lose their jobs, nobody goes to jail?
I want you to look at this definition: identity theft is “the fraudulent acquisition and use of a person’s private identifying information, usually for financial gain.”
So the question: is that what took place? Using a person or customer’s identifying information in order to set up an account they did not request or want in order to hit sales goals or financial gain?
That is exactly what was happening here, and that is the exact definition of identity theft.
Under federal law, let alone additional state laws, identity theft carries a penalty of up to 15 years in prison as well as substantial fines.
In Wells Fargo’s case no one is going to jail— and the fine is not substantial. The $190 million is just over 3% of the $5.6 billion in revenue that Wells Fargo pulled in for just the second quarter of this year.
What you need to know is that when Wells Fargo agreed to pay this pittance of a fine, the government also agreed to something else. It gave the bank immunity for any uncovered crimes that may have taken place during this same time period.
So in short: no one goes to jail; the bank pays a comparatively tiny fine; the government gets a big pile of cash; and the victims get about $25 per person.
So what about this deal would actually stop Wells Fargo or any other bank from doing the exact same thing over and over again in the future?
That’s Reality Check. Let’s talk about that tonight on Twitter.