According to claimed that have been made by consumers who are trying to beef up a settlement with the bank over abusive sales practices, Wells Fargo & Co. may have opened as many as 3.5 million fraudulent accounts in the last 15 years.
There were claims that since 2011, employee at the bank may have opened more than 2 million deposit and credit-card accounts without customers’ permission which resulted in a national class-action lawsuit and ion March this year the bank finally managed to and agreed to a $110 million deal to resolve that national class-action lawsuit linked to the claims. The total estimates on the number of fake accounts was raised by lawyers for consumers on Thursday after the bank had, last month, agreed to expand the accord to include dates as early as May 2002.
“This number may well be over-inclusive, but provides a reasonable basis on which to estimate a maximum recovery,” the attorneys said in a filing in San Francisco federal court. According to the filing, the new figure is based on public reports, negotiations and bank documents.
It is less than a week now that U.S. District Judge Vince Chhabria in San Francisco is slated to consider preliminary approval of the settlement and it is amidst that time frame that Wells Fargo questioned the accuracy of the latest estimate. It was updated last month to provide $142 million.
“The unauthorized account number reported in yesterday’s filing are estimates made by the plaintiffs’ attorneys based on a hypothetical scenario and have not been verified. The number of unauthorized accounts estimated in the filing do not reflect actual unauthorized accounts,” Jim Seitz, a spokesman for the bank, said in an emailed statement.
Employees may have opened almost 2.1 million unauthorized accounts from May 2011 to July 2015, found a Bottom of Form
consultant Wells Fargo hired to determine how many accounts could have been fraudulent. When they fined the bank $185 million in September over improper sales practices and a culture that drove employees to create fake accounts, regulators used the consultant’s deposit and credit-card account findings.
If each consumer harmed by the bank submits claims, cash compensation amounting to $40 to $70 per fake account, credit-damage relief and reimbursement of wrongly charged fees, would be covered under the class-action settlement if it is approved by the court and the parties. Up to $21 million of the $142 million settlement, plaintiffs’ attorneys have capped their fees at 15 percent of the deal value.
The case is Jabbari v. Wells Fargo & Co., 15-cv-02159, U.S. District Court, California Northern District (San Francisco).
(Adapted from Bloomberg)