After reading this thread and many other posts about Wells Fargo I have to ask, why does anyone bank with them? Do they serve some community that would go without banking if WF didn’t exist?
I am sure they do because it is one of the biggest and most widespread banks in the world. The only reason I have accounts with them is because they bought my mortgage a few months after I established it. You can’t control that as an individual. I could refinance with another bank and they could buy it right back. The financial world is nothing but one giant rabbit hole.
Most of my banking is with Bank of America but I didn’t pick them either. They simply bought the very large bank that bought the medium sized bank that bought the local bank where I originally established my account years ago. I have never had bad luck with them but I also wouldn’t be surprised if they were caught up in a similar scandal at any time. In this age of banking consolidation, you don’t have much choice in where your accounts end up unless you are always prepared to move your money.
I am always ready to go and they can all bite my ass. I make sure that I never have any real obligations to any of them and screw them over much more often than they screw me (it is a personal hobby but completely possible for anyone with any sense or cents for that matter).
My mother worked for Wells Fargo before her retirement, and they were always pushing her to upsell products and cold call established customers. And she was a teller, she just was supposed to deal with the customers coming in the door, she wasn’t an office worker.
It doesn’t surprise me at all; lots of corporations like to push employees to upsell or be fired, so people who need the job to eat have a strong incentive to game the system. The risk of being fired for creating phony accounts has a hard time being scarier than the risk of being fired for not meeting quotas, because you might not get caught for the phony accounts but are definitely going to get caught for not selling enough accounts. The higher ups will claim ‘no, this is against our rules, see the rule?’ and fire anyone who gets caught, while crying to Forbes about how employees these days just aren’t honest. The scheme of setting incentives up that strongly push people to do shady stuff or get fired should open the people setting up the incentives to penalties or criminal law, but it doesn’t.
Credit Unions aren’t banks but do most banking functions, and are generally much more helpful to their customers and lack the moustache-twirling schemes that banks love. You should look into any that you qualify for if you decide that you want to get out of BOA.
Probably not very high. These were not accounts that made WF any money. Yes, some did generate fees but not much in the grand scheme of things and near empty accounts are generally still money losers.
Management wanted something: active revenue generating accounts.
To get that, management didn’t provide incentives for that because it is too far removed from the actions front line bankers can take (open accounts). Giving them a bonus 18 months later when it turns out the account they opened was for a really good customer isn’t going to work for various reasons.
So they provided incentives for simply opening accounts.
It didn’t require a grand conspiracy for the bankers to figure out how they could game their numbers. And it was caught, these fines have been years in the making.
You get what you pay for. If you’re paying for opened accounts people will figure out how to give you open accounts. If you paid them for how long they spent with customers they’d find useless ways to take longer with customers.
These accounts did not provide anything Wells Fargo actually wanted. There’s no reason upper management would approve of such a scheme. Yes, some of the accounts were fee generating but most of them weren’t, the accounts produced neither real revenues nor brand loyalty (nobody is going to be more loyal because of accounts they don’t know they have).
On a related note, I work for another major bank.
Banks like it when customers go paperless. Each statement printed and mailed costs something like 70 cents. The biggest banks will spend nearly a billion dollars a year just mailing statements and other regulatorily required communications that we can just as easily provide electronically if the customer says yes.
So paperless was added to the measurements that branch bankers had tied to bonus compensation. And a year later we found a fair amount of internal fraud because bankers would set accounts to paperless without customer permission (and the smarter ones would then flip them back after it had been counted in their favor).
Nobody in management wanted this. There was no chance it could pay off for the bank in the long term. We just weren’t incentivizing the right thing. And as a result we had to deal with regulators, angry customers, and fire bankers. Then we had to spend a year putting controls in place to make going paperless much more awkward for customers so that it was harder for bankers to game the system.
Banks and their management have done all kinds of bad things, but I’m reasonably confident that this is one where the malicious acts do not go very high (though bad management in not foreseeing it might, especially in combination with unreasonable quota demands that pretty much guarantee some bankers will look to any crack in the system they can find).
And considering that over the last decade Wells Fargo has probably employed a half million branch bankers (and has nearly 100,000 at any given time) I’m actually kind of surprised only 5,000 did it (or did it poorly enough that they got caught).
Considering all of these employees got fired when the company did an independent internal investigation I find it hard to believe this goes very high in the management chain. Still, I expect some middle management heads will roll for dereliction of duty.
According to the articles I’ve read managers have gotten fired as part of this. How high up they’re not saying.
But obfusciatrist got it. Any decent manager knows that if you pay people based on some metrics people will act to meet those metrics which may or may not be to the benefit of the company. It probably seemed perfectly reasonable in a meeting to create incentives to force salespeople to sell more accounts. Why people who were supposed to sell accounts had the power to move money around is beyond me.
I am a WF customer since when we moved here we had about two hours to find a bank and they had by far the best deal. They have been good to me since I owe them lots of money, which makes me a good customer. And if they tried upselling I’ve never noticed, though several timeshare and vacuum cleaner salesmen can testify that I’m not a good sales prospect.
But they are dumb. I’ve had to get a bank stamp for some documents relating to a trust, and each time I go in they tell me that I need this other kind of stamp - not the one the document clearly states is required. Even the second time when I could tell them that the bank stamp worked. It took about half the staff to finally accept I knew what I was talking about.
Here is the scam as I understand it from reading about it in the local California papers and the Times. Some guy to make the quota would transfer a tiny bit of money into a new account they created, and also set up an email address where the notification of the new account would be sent. After the account was open long enough for them to get credit they would close it and move the money back to the original account, so theoretically no one would get ripped off except WF.
What seems to have happened is that lots of them never closed the new accounts, so the owners started getting dinged for low balance fees, and sometimes dinged on their credit reports for having too many accounts. I guess they would also get dinged if they were skating close enough to a zero balance to get overdraft charges from the small amount of money getting withdrawn.
Based on a previous thread it seems that hardly anyone balances their checkbook any more, so the customer might not notice. I do and I would have noticed even the smallest amount vanishing from my account.
I also don’t get how the WF people could open accounts so easily. When I open a new account the paperwork makes it seem that I’m surely a drug smuggler trying to launder money, and I need all sorts of ID. A far cry from my first savings account in second grade back when banks wanted your money.
I was wrong in post #7–it was the L.A. City Attorney, (not the County DA), who first started to investigate it, and it was only last year. However, the L.A. Times was investigating it long before that. Here is an ABC News video about the original lawsuit.
[QUOTE=Ike Witt]
After reading this thread and many other posts about Wells Fargo I have to ask, why does anyone bank with them? Do they serve some community that would go without banking if WF didn’t exist?
[/quote]
Well–kind of. In fact, I started getting suspicious about Wells Fargo even before the L.A. Times investigation, because I was working with newly arrived refugees–people with no credit history whatsoever–who were getting credit cards when they opened a bank account with Wells Fargo. These were people who hardly knew the difference between a debit card and a credit card.
I take it that you didn’t know that, pre-computer, accountants did their work in pencil. Finalized and audited in ink, but penciled in first.
You’re probably thinking of cashiers and book-keepers.
True for a new to the bank customer. Know Your Customer laws require a fair amount of documentation.
However, for existing customers all of that information is already on file and has to be available to the banker for verification and update reasons. So new accounts for an existing customer don’t require presenting the same documentation all over again.
As for why the person who opens the account has the ability to move money, that is because the new account needs to be funded at opening. A control might be that a different person has to arrange the funding than opens the account but from a customer service point of view that would be annoying to the customer and wouldn’t be considered until a lapse like this happens.
This is why where I work you a branch banker can’t actually set your accounts to paperless. All they can do is set a flag on your account indicating you want to be paperless and then the next time you log into online banking (from a non-bank IP) you’ll be asked to confirm that before it actually happens.
Annoying on all fronts but driven by needing a control once bad behavior was identified.
For a while I called small businesses to make appointments for a manager of a largish bank in a two mile radius to come out to say hi and talk about what they offered. Many times the business owner would say he’d been with WF or BoA for years and wasn’t interested. I was not allowed to even ask, “How often has your bank been in the news lately,” much less recite their litany of fines and near-bankruptcies because my bank thought it was tacky. My bank is never in the news, which I think is a good quality in a bank.
Seconded. I have an online only account with BoA I haven’t checked on in awhile. For all I know they snuck in some fees and sucked out all my money there. I do all my main banking with the local credit union and have always mainly used credit unions. They’re much more helpful and while they do try to get you to create special accounts or apply for credit cards the way banks do, I still feel like they actually aren’t out to rip me off every chance they get, and my money feels safer.
And therefore, to encourage this, they charge a “convenience fee” to customers for switching to paperless.
Let’s just say I have a sheath of emails from 2011 re: this very thing happening to me. The man who did this is still at the bank, and he and his manager will have a very unpleasant visit from me.
Ooh. Let us know what happens. This should be interesting!
5,301 and counting!
Out of curiosity what bank does that? None of the 8 I have accounts with do.
I’m aware of a few largish and regional banks (like BBVA Compass) that charge fees for paper statements, haven’t heard of one charging to go paperless (which doesn’t mean none do, of course).
The first thought I had when I read this story was, “Why weren’t there whistle blowers?”
One wonders if honest folk who tried to stop this were all fired.
And also not what I said. There are restaurants that will, if one goes in and says “I’m down on my luck and hungry” will give a person free food. I know of at least 2 around here that operate that way, one a chain and one mom-and-pop.
There is NOT a reason to expect a bank to exchange money for a non-customer. That roll of quarters in your example costs the bank MORE THAN $10. Can you understand that concept? Besides the face value amount paid to the Federal Reserve Bank, there are also the following costs: transportation, storage, employees to count/handle, building overhead, etc., etc. Every time a bank exchanges a roll of quarters for $10 they lose money. Now, again I ask, why should one expect a bank to lose money for a non-customer? And why wouldn’t you hold other businesses to that same expectation?