Wells Fargo boosts fake-account estimate 67% to 3.5 million

Bloomberg

Wells Fargo & Co. raised its estimate for how many bogus accounts employees may have created, a sign the bank is still struggling to move past a scandal that sparked record fines and congressional investigations.
An outside review into more than 165 million deposit and credit-card accounts found an additional 1.4 million that were potentially unauthorised, bringing the total to about 3.5 million, according to a statement from the San Francisco-based firm. The revised estimate covers January 2009 to September 2016, almost twice as long as the period examined in the initial review.
The disclosure of even more fraudulent accounts threatens to catapult Wells Fargo back into the political crosshairs just as Congress returns September 5 from its summer recess. The scandal came to light almost a year ago after regulators slapped Wells Fargo with fines of $185 million over its sales practices, prompting congressional hearings and resulting in the bank naming new leaders, clawing back executives’ pay and beginning an overhaul of its retail division.
“New data should cause some lawmakers to re-engage on the issue,” Isaac Boltansky, an analyst with Compass Point Research & Trading, said before the new tally was announced. Democrats will again argue it proves Washington needs to keep rules tight on financial firms, while Republicans will continue to fault Consumer Financial Protection Bureau officials for not spotting the misconduct themselves, Boltansky said.
Wells Fargo expanded its review after Washington lawmakers lambasted the company following former Chief Executive Officer John Stumpf’s testimony last September about the bank’s sales practices. Under pressure, the bank agreed to review records dating back to 2009, rather than through 2011 as it initially did.
The company said it has paid or identified $10.7 million in customer compensation related to the investigation. The figure includes $7 million of refunds, up from $3.3 million the bank had previously disclosed. It also includes $3.7 million related to what it described as the “complaints process/mediation.”
“There’s never just one cockroach in the kitchen,” Berkshire Hathaway Inc. CEO Warren Buffett, whose firm is the largest shareholder in Wells Fargo, said.
“Anytime you put the focus on an organisation that has hundreds of thousands of people working for it, you may very well find it wasn’t just the one that misbehaved.”

Online Service
The expanded review also uncovered about 528,000 potentially unauthorised online bill-pay enrollments, highlighting users with only one “minimal” payment and no further use of the service. “The analysis did not definitively identify whether an enrollment was authorized by a customer or not, and properly authorised enrollments are likely part of this total,” Wells Fargo said in the statement, adding that affected customers will be refunded $910,000 for related fees and charges.
“Today’s announcement is a reminder of the disappointment that we caused to our customers and stakeholders,” CEO Tim Sloan said. “We apologise to everyone who was harmed by unacceptable sales practices that occurred in our retail bank.” The company has no other reviews under way and isn’t planning additional ones, allowing it to focus on making refunds to customers, according to Oscar Suris,
a spokesman.