Wells Fargo agrees to pay $575 million in fake account lawsuit

The troubled bank has to pay a multi-million dollar settlement after defrauding customers.

US money Source: Bloomberg

Wells Fargo has agreed to pay customers $575 million in a blockbuster settlement. The bank will reimburse its clients for creating fake accounts in their names.

Fake accounts, real consequences

Wells Fargo has been embroiled in scandal since it was revealed in 2016 that the bank created fraudulent accounts in customers’ names since 2009. Approximately 3.5 million bogus funds were started and about 190,000 of those clients were needlessly charged fees. Attorneys general from all 50 US states and the District of Columbia filed a lawsuit against the corporation on behalf of the cheated customers.

Tim Sloan, Wells Fargo's chief executive officer (CEO), apologised when the news broke in 2017 and blamed excessive sales goals for the improper practices.

‘We apologise to everyone who was harmed by unacceptable sales practices that occurred in our retail bank,’ said Sloan in a statement.

The bank was also fined $1 billion for coercing customers into buying unnecessary car insurance policies. Wells Fargo is also under fire for a computer error that that emptied the checking accounts of thousands of clients. Because of the glitch, thousands of home owners lost their houses.

What’s next for Wells Fargo

Sloan vowed to make amends to regain customers’ trust after the settlement.

‘This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank,’ said Sloan.

Wells Fargo has had a series of advertisements promising to implement more ethical practices. Despite the pledge to improve, the bank will likely face more investigations when the US Congress convenes in January. US Senator, Elizabeth Warren, has often criticised the company and called for Sloan to be fired. She will likely call for hearings to question Sloan and other executives from the corporation.

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