Daily Management Review

U.S. Senator Claims Wells Fargo Account Scandal Extends to Small Business: Reuters


10/05/2016




U.S. Senator Claims Wells Fargo Account Scandal Extends to Small Business: Reuters
Questions about the scope Wells Fargo & Co's issues with unauthorized accounts were raised as, according to a U.S. lawmaker, the scandal over improper sales practices at Wells Fargo & Co extended to thousands of small-business owners, reported Reuters.
 
A "full accounting" of customers affected be provided by Wells Fargo Chief Executive John Stumpf, demanded a Sept. 29 letter by Sen. David Vitter, a Louisiana Republican. Vitter heads the U.S. Senate’s small business committee and is a member of the Senate.
 
Vitter wrote that discussions between congressional staffers and Wells Fargo "have indicated that the fraudulent activity of your employees was not limited to Wells Fargo's consumer banking operations. Thousands of small business owners were impacted by this fraud."
 
Wells has identified about 10,000 small business accounts that were subject to improper practices, reported Reuters quoting a person familiar with Vitter's probe. Vitter spokeswoman Cheyenne Klotz declined to comment on specifics about those practices.
 
About a month ago the bank reached a $190 million settlement over opening as many as 2 million accounts in retail customers' names without their knowledge and the revelations of Wells Fargo's problems with small-business customers follows that settlement. It fired about 5,300 employees for improperly opening the accounts, the bank has said.
 
With U.S. authorities launching investigations into the bank's sales practices, including the Justice Department and the Labor Department and Stumpf facing heated questions before two congressional committees, the disclosures have caused a public furor.
 
"While the vast majority of accounts in the settlement were consumer accounts, to the extent there were small business accounts included, all were previously reported in the total number of potentially impacted accounts. As stated earlier, Wells Fargo has already refunded 115,000 accounts. The impacted accounts, including Small Business, were part of our Retail Bank business," said Wells spokeswoman Jennifer Langan.
 
Claiming that the bank’s figure of nearly 2 million accounts being affected did not include small business accounts, a Consumer Financial Protection Board spokesman contradicted the Wells statement.
 
Lawsuits from former employees, customers and shareholders related to the issue are being battled by Wells. The Small Business Administration's inspector general, Peggy Gustafson, investigate Wells, too, requested Vitter in a second letter.
 
Senior bank executives have characterized the issue as limited to relatively few customers and employees in the retail bank and have apologized for opening accounts customers did not request. The first hard sign that problems may extend further is evidenced by the early results from Vitter's examination.
 
The abusive sales practices with multiple business accounts were described by a former Wells employee, and a lawyer representing former employees and a former and current Wells customer to whom Reuters reportedly has talked. Seven accounts after enlisting the help of his accountant were discovered by Jose Maldonado, a restaurant owner in Southern California who banked with Wells Fargo for 15 years. He ultimately moved his remaining business to Bank of America Corp and JPMorgan Chase & Co. after initially closed extraneous ones.
 
"I don't like Wells Fargo anymore. I don't feel comfortable. In the past, there were sometimes crazy accounts without my permission," Maldonado said in an interview.
 
Langan declined to comment on Maldonado's accounts.
 
(Source:www.reuters.com) 






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