Last week, Wells Fargo was ordered to pay a whopping $185 million and refund $5 million in fees wrongly charged to their customers.
Now, Wells Fargo is amid scandal again after firing 5,300 employees who had opened millions of fake customer accounts in order to achieve unrealistic sales goals set by the bank.
The fired employees claim they were forced to open accounts or else they would lose their jobs.
In the wake of this scrutiny, Wells Fargo released a public statement saying that now they will stop setting those sales goals.
Wells Fargo CEO, John Stumpf, released a statement:
“We are eliminating product sales goals because we want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers.
“[This has] significantly strengthened our training programs, controls and oversight. We believe this decision is both good for our customers and good for our business.”
The sales goal objective the conglomerate bank implemented was called the “Gr-eight initiative”, whereas employees were told to sell at least eight financial products including; checking accounts, debit cards, and savings accounts to each customer.
“In fact, that same year, in a presentation to investors, Tolstedt and other executives touted the bank’s ‘expertise’ in selling multiple products, which was immensely profitable for the bank.
In fact, customers that had 10-plus products each with the bank were 10 times more profitable. The phrase “cross-sell” came up in the presentation 19 times.”
Former licensed personal banker, Sabrina Bertrand, said, “the sales pressure from management was unbearable.”
A deposition filed in Los Angeles against Wells Fargo even described the daily routine as a “pressure cooker environment” with employees having to discuss daily sales goals 4 times a day.
Adding insult to injury, Carrie Tolstedt, an executive at Wells Fargo—who led the fake accounts unit—has pocketed a staggering $124 million during her reign and took home $9 million last year alone.
The cross-selling multiple account package was Tolstedt’s invention and yet she is only “retiring”.
A spokesman for Wells Fargo said, “She made a personal decision to retire after 27 years with the company.”
That’s not only convenient timing but also an enormous stab-in-the-back to the 5,300 other employees who lost their jobs due to Tolstedt’s creation.
Jaret Seiberg, an analyst who covers the bank at Cowen and Company, says the bank will regress from its, “special status as a mega bank that was really just a regional bank.”
Seiberg added that it wouldn’t stop at just bad press for Wells Fargo and has “quickly become a political problem,” and giving the government “more ammunition to argue that mega banks are unmanageable.”
The Senate wants Stumpf to testify before Congress about the scandal, so you should expect the announcement of dates for hearings soon.
Are you an account holder at Well’s Fargo and did they try to sell you on multiple accounts? What has your relationship been like with them thus far?