Wells Fargo has been having a rough go of it. The banking giant’s wholesale banking unit is being probed for fraud by the Department of Justice after allegations arose that employees changed corporate customers’ information on documents without their knowledge or consent. Personal information — including social security numbers, birth dates, and addresses — of those associated with the bank’s business clients is said to have been altered or added by workers in the wholesale unit. Apparently, they were under pressure to meet regulatory deadlines, including one related to anti-money laundering controls.
The DOJ is looking into any possible connections to management pressure, especially given Wells Fargo’s storied (and very, very recent) history. In 2016, the company was successfully sued for the creation of over 1.5 million fraudulent accounts using customer information. From phony bank accounts to over 560,000 credit card applications, the fees associated with this internal fraud earned the bank money and allowed Wells Fargo employees to boost their sales figures.
In total, around 5,300 employees were fired and the Consumer Financial Protection Bureau (CFPB) forced the bank to pay $185 million in fines, along with $5 million to refund customers (the credit card accounts alone incurred over $400,000 in fees, including annual fees, interest charges, and overdraft-protection fees).
Identity fraud is by no means a new trend: 2017 alone saw around 16.7 million victims of the crime. The shock of Wells Fargo’s current scandal mostly comes from the fact that the previous one — which was positively gargantuan in scale — occurred so recently! The bank insists that the alterations of customer information has not negatively impacted customers, and that “the situation involved a new process and a new required document” which includes the implementation of additional training and procedures.
Internal fraud itself is tricky business because companies need to trust employees to manage sensitive information. Banks are especially at risk due to their close proximity to potentially dormant accounts where employees can move money around without anyone noticing.
The motivations for such a crime are where Wells Fargo diverges from the expectations; everybody has heard of the scorned employee who feels underappreciated and abused (four out of five employees don’t feel that they have enough support or encouragement from their supervisors, so it’s certainly a believable story) and thus turn their goal to stealing as much as possible while they’re still employed. The Department of Justice, however, seems to think that the opposite was true: bank managers are being investigated for encouraging their employees, all right, just not in productive — or strictly legal — ways.
Regardless of what the Department of Justice investigation turns up, Wells Fargo’s reputation will likely suffer another major hit.