Tuesday, May 5, 2015

"Los Angeles sues Wells Fargo over sales tactics"

"The city of Los Angeles accused Wells Fargo & Co. in a lawsuit of pressuring employees of its retail bank to commit fraudulent acts, such as opening customer accounts without their approval, in order to meet management's sales goals.

Wells Fargo has for years "victimized their customers by using pernicious and often illegal sales tactics" that resulted in customers having to pay monthly service fees on accounts they didn't authorize as well as feeling forced to buy identity-theft protection services in order to prevent future fraud, the city said in a complaint filed in state court on Monday.

Wells Fargo has the reputation for being among the most successful U.S. banks at "cross-selling" their customers into other products and services the bank offers, such as getting a checking-account holder to take out a Wells Fargo credit card...

According to Los Angeles city attorney Michael Feuer, the bank accomplished this in part by abusing employees and telling them "to do whatever it takes" to reach quotas on the number of new accounts they must open. Managers "constantly hound, berate, demean and threaten employees to meet these unreachable quotas" and gather to discuss daily sales for each branch and employee four times a day, the complaint said.

...the city said the bank "has done little, if anything, to terminate these practices, nor to reform the business model it created that has fostered them."...

The complaint also provided a glossary of terms that it said Wells Fargo employees used to describe unsavory sales tactics, such as "pinning," or assigning personal identification numbers to customer debit cards without their authorization in order to open an online banking account, which counts toward the sales quota...

The allegations were first raised in a series of articles in the Los Angeles Times in 2013.

This week's complaint isn't the first time Los Angeles has accused Wells Fargo of harmful consumer practices. In a December 2013 lawsuit, the city said Wells Fargo discriminated against minorities and overcharged them for mortgages since at least 2004..."