City of Los Angeles, CA Sues Wells Fargo for Fraud

The city of Los Angeles has filed a civil complaint against Wells Fargo Bank (WFC). The lawsuit accuses the bank of encouraging employees to take part in conduct that was illegal and fraudulent, including setting up unauthorized accounts for customers, charging them unwarranted fees, and ruining their credit.

The city is looking to get a court order stopping the alleged wrongdoing. It wants penalties for every violation, as well as restitution for customers that were hurt. The case is applicable to residents of Los Angeles County and perhaps even customers outside that area.

According to the complaint, employees purportedly misused the confidential data of customers and neglected to close unauthorized accounts when the latter complained. Certain employees even allegedly raided customer accounts for money to set up additional accounts. When unwarranted fees went unpaid, the bank purportedly put customers into collections because of unauthorized withdrawals and damaging data on their credit cards because of these unwarranted fees.

Such actions, contends the city, occurred because the bank was pressuring employees to generate sales. Customers sustained financial harm as a result, while Wells Fargo made a profit and employees were blamed.

Meantime, the California-based bank has pinned these problems on a few rogue employees, whom it says it fired or disciplined. However, the city of LA believes that Wells Fargo has made minimal efforts at making sure such abuses stop. For example, contends the complaint, when the bank took action against an employee for sales conduct that was unethical, it didn’t notify customers of the breach, refund the fees that were owed to them, or offer remedies for other injuries its staff may have caused.

The Los Angeles Times, in 2013, investigated these allegations against Wells Fargo, which is known for cross-selling financial products to customers. The paper’s probe echoed similar claims as this lawsuit, with many statements made coming from current and former Wells Fargo employees who worked at different branches.

Bank workers were purportedly coached on how to inflate sales figures. Employees set up duplicate accounts without letting customers know. Pre-approved credit cards were ordered without customer consent. Complaints about the never requested cards were dismissed as having been generate by computer glitch or “mistake,” with cards accidentally issued to the wrong person with a similar name as the customer who’d supposedly placed the order. According to employees, Wells Fargo expected staff to sell at least four financial products to the majority of their customers, with some shooting to sell eight per household.

Since the LA Times published its findings from the probe, dozens of Wells Fargo employees and customers have come forward to report similar issues. Complaints are coming in even today.

Shepherd Smith Edwards and Kantas, LTD LLP represents investors in recovering losses they suffered because of securities fraud.

Wells Fargo Accused of Fraudulent Behavior, Taking Advantage of Customers, ABC News, May 5, 2015

Wells Fargo’s pressure-cooker sales culture comes at a cost, Los Angeles Times, December 21, 2013

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