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The last five years have not been good for Wells Fargo, one of the nation's "Big Four" banks. The institution has been wrapped up in legal issues since it was discovered that millions of accounts were created without customer consent.
In September 2021, just as Wells Fargo was getting over the last scandal, the U.S. Department of Justice brought a fraud complaint against the bank in federal court for the Southern District of New York. The complaint alleged that the bank intentionally overcharged 771 commercial customers for foreign exchange (or "FX") services between 2010 and 2017.
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According to the complaint, Wells Fargo told its commercial customers that they would be charged a fixed price rate (or "spread") for FX services. But the company went on to encourage employees to overcharge customers using the following
The company admitted that sales specialists would celebrate transactions resulting in a larger FX spread than agreed with the customer and use expressions such as "when in doubt, spread them out" or "back the truck up" to describe their tactics.
Wells Fargo entered into a $72.6 million settlement agreement soon after the complaint was filed, admitting to the wrongdoing. The bank agreed to pay $35.3 million in restitution to overcharged customers and the remaining $37.3 million to the U.S. as civil penalties and asset forfeiture under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).
Approval from U.S. District Judge John Koeltl is still required for the settlement agreement to be enforceable.
Even though the fraudulent accounts scandal and the fraudulent overcharge for foreign exchange services are different issues, both seem to stem from a work culture that pressures employees to meet overly demanding targets and that fosters disrespect towards customers. With respect to the accounts fraud, Wells Fargo admitted that it pressured employees to meet "unrealistic sales goals that led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent."