Americans for Financial Reform applauds the action taken against Wells Fargo this week by the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the Los Angeles City Attorney. They have rightly forced Wells Fargo to stop signing up customers for unneeded and unrequested credit cards, bank accounts, and other financial products; to refund unauthorized charges; and to pay $185 million in punitive fines.
As the consent orders highlight, Wells Fargo’s egregious violations of consumers’ rights were fueled by sales quotas imposed on front-line bank workers. These settlements underline the importance of strong consumer protection enforcement from federal and local regulators. They highlight the particular importance of attention to bank compensation practices, including the need to make sure banks are not pushing their employees to harm consumers and break the law by requiring them to meet otherwise unattainable sales goals.
These cases vividly demonstrate the importance of the CFPB’s rulemaking, as well as its enforcement. Many of the harmed consumers were blocked from suing Wells Fargo in court – individually or as part of a class action – by the bank’s use of forced arbitration clauses, despite the fact that the customers never actually signed up for these accounts. The CFPB is in the midst of a rulemaking that would restrict forced arbitration and restore consumers’ right to join together in class actions to hold banks accountable for this kind of predatory behavior.