Wells Fargo & Co's account scandal is not limited to its consumer banking sector, U.S. Senator David Vitter told the bank's chief executive in a letter.

Thousands of small business owners were also impacted by Wells Fargo's practices, wrote Vitter, a Republican from Louisiana, in a letter dated Sept. 29 to Wells Fargo chief executive John Stumpf and seen by Reuters.

Vitter demanded a "full accounting" of small business owners affected by "fraudulent activity." Around 10,000 small business accounts were affected by improper Wells practices, people familiar with the matter said. </s> NEW YORK (Reuters) - The scandal over improper sales practices at Wells Fargo & Co extended to thousands of small-business owners, according to a U.S. lawmaker, raising questions about the scope of the bank’s issues with unauthorized accounts.

A Wells Fargo Bank is shown in Charlotte, North Carolina, U.S., September 26, 2016. REUTERS/Mike Blake

In a Sept. 29 letter viewed by Reuters on Tuesday, Sen. David Vitter, a Louisiana Republican, demanded that Wells Fargo Chief Executive John Stumpf provide a “full accounting” of customers affected. Vitter is a member of the U.S. Senate’s banking committee and also heads its small business committee.

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,” Vitter wrote. “Thousands of small business owners were impacted by this fraud.”

A person familiar with Vitter’s probe say Wells has identified about 10,000 small business accounts that were subject to improper practices. Vitter spokeswoman Cheyenne Klotz declined to comment on specifics about those practices.

Revelations of Wells Fargo’s problems with small-business customers come almost a month after it reached a $190 million settlement over opening as many as 2 million accounts in retail customers’ names without their knowledge. The bank has said it fired about 5,300 employees for improperly opening the accounts.

The disclosures have caused a public furor, with Stumpf facing heated questions before two congressional committees and other U.S. authorities launching investigations into the bank’s sales practices, including the Justice Department and the Labor Department.

“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,” said Wells spokeswoman Jennifer Langan. “As stated earlier, Wells Fargo has already refunded 115,000 accounts. The impacted accounts, including Small Business, were part of our Retail Bank business.”

A Consumer Financial Protection Board spokesman contradicted the Wells statement, however, saying its figure of nearly 2 million accounts being affected did not include small business accounts.

Wells is also battling lawsuits from former employees, customers and shareholders related to the issue. In a second letter, Vitter requested that the Small Business Administration’s inspector general, Peggy Gustafson, investigate Wells, too.

PACKAGES OF THREE

Senior bank executives have apologized for opening accounts customers did not request, but characterized the issue as limited to relatively few customers and employees in the retail bank. Early results from Vitter’s examination are the first hard sign that problems may extend further.

Reuters also spoke to a former Wells employee, and a lawyer representing former employees and a former and current Wells customer, who described abusive sales practices with multiple business accounts. Jose Maldonado, a restaurant owner in Southern California who banked with Wells Fargo for 15 years, said he discovered seven accounts after enlisting the help of his accountant. He initially closed extraneous ones, and ultimately moved his remaining business to Bank of America Corp and JPMorgan Chase & Co.

“I don’t like Wells Fargo anymore. I don’t feel comfortable,” Maldonado said in an interview. “In the past, there were sometimes crazy accounts without my permission.”

Langan declined to comment on Maldonado’s accounts.

An ex-Wells Fargo business banker, who declined to be identified, said employees at his former branch were required to sell products to small business customers such as hair-salon owners and carpet cleaners in packages of three - regardless of whether they needed them.

Those typically included accounts for checking, credit card processing and payroll, and were often linked to additional savings accounts, said the former Wells banker. Bankers also tacked on business credit cards and were pressured to call a Wells insurance unit, with the customer present, to push business liability policies. Langan, the Wells spokeswoman, said the bank discontinued those packages in April 2015.

Attorney Jonathan Delshad filed two class-action lawsuits against Wells Fargo in September on behalf of former employees, including one business banker, who say they were fired for refusing to create fake accounts to hit sales quotas. Wells suspended those quotas on Oct. 1.

Other former Wells Fargo business bankers contacted Delshad after the lawsuit received media attention, he said. “Business owners are also being ripped off,” one wrote to him in a message he provided to Reuters.

SOURED RELATIONSHIPS

Business and corporate governance experts say small-business customers can be as susceptible to fraud as any customer.

Owners are typically knowledgeable about their business expertise but not about banking services, said Peter Conti-Brown, a financial regulation professor at the University of Pennsylvania’s Wharton School. For example, a new dentist who borrows from a bank to buy a practice may then need other services that she does not even know exist, such as payroll management or credit-card clearing.

But the potential for abuse still exists, he said. A bank can sell multiple, unnecessary accounts and credit cards to sole proprietors whose needs rarely exceed making deposits and writing checks. The risk of abuse is greater when bankers are required to sell a certain number of products to meet performance goals.

“The best case is that you will sour your relationship, and in the worst case, you’ll get bankers committing fraud,” Conti-Brown said. “Wells Fargo has seen both of these things.” (This article corrects the lede to add the dropped word “of”) </s> Thousands of small business owners were also impacted by Wells Fargo's practices, wrote Vitter, a Republican from Louisiana, in a letter dated Sept. 29 to Wells Fargo chief executive John Stumpf and seen by Reuters.

Vitter demanded a "full accounting" of small business owners affected by "fraudulent activity." Around 10,000 small business accounts were affected by improper Wells practices, people familiar with the matter said.

A Wells Fargo spokeswoman could not immediately be reached for comment about Vitter's letter.

Vitter, who chairs the U.S. Senate's small business committee, launched a probe on Sept. 20 into whether the bank’s opening of as many as 2 million accounts in customers’ names without their permission had any impact on small businesses.

Wells Fargo spokeswoman Jennifer Langan said last week that Wells is reviewing earlier request letters sent by Vitter and will address them “in a timely manner.”

The bank also plans to share information about its operations and lending with the U.S. Small Business Administration (SBA), Langan added at the time. </s> Wells Fargo just can't get past its fake account scandal.

On Thursday, the bank acknowledged it had created more bogus customer accounts than previously estimated. An outside review discovered that 1.4 million more potentially unauthorized accounts were opened between January 2009 and September 2016.

That brings the total to 3.5 million potentially fake accounts — two-thirds more than the 2.1 million the bank had previously acknowledged.

That's not terribly surprising, actually, since questions have been raised for months about whether the bank initially looked at too narrow a time span when it reviewed the fraudulent-account scandal.

Last year, it came to light that a pressure-cooker sales culture at the bank had pushed thousands of employees to sign up customers for credit cards and checking accounts that they didn't want or know about. The bank initially reviewed accounts from mid-2011 through mid-2015.

The latest review looked at a window of time twice as long — from January 2009 through September 2016 — and found the additional accounts.

It also found that about 190,000 of the 3.5 million potentially unauthorized accounts incurred charges and fees. The bank says it will provide an additional $2.8 million in customer refunds and credits.

"We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank," Wells Fargo CEO Timothy Sloan said in a statement.

This most recent revelation is likely to ratchet up the congressional and regulatory scrutiny that Wells Fargo already faces. Federal and state investigations are ongoing. The fake-account scandal has taken a financial and reputational toll on the bank: Former CEO John Stumpf retired last year, and the bank was ordered to pay $185 million in fines and penalties for opening accounts without customer permission.

Earlier this summer, news broke of yet another scandal, this one involving some 490,000 auto loan customers whom Wells Fargo signed up for insurance they didn't need. The bank has acknowledged that tens of thousands of people wound up in default, which affected credit scores. And thousands had their cars repossessed.

The bank also faces a series of lawsuits, including a racketeering case, over allegations that it overcharged homeowners for appraisals after they defaulted on mortgage loans.

The sales practices at Wells Fargo have come under harsh criticism in Congress, most notably from Sen. Elizabeth Warren, D-Mass., who has sought the ouster of 12 bank board members over the scandal. In a letter to Federal Reserve Chair Janet Yellen, Warren said the Fed has the legal authority to oust those board members who served at the bank while customer accounts were being created without permission. Yellen has called Wells Fargo's activities during this period "egregious and unacceptable" and hasn't ruled out ousting the board members.

Former branch workers at Wells Fargo have told NPR they faced unrelenting pressure from managers to open as many customer accounts as possible.

Some of them say they were fired after trying to blow the whistle by complaining to the bank's ethics hotline. They say the bank retaliated not only by firing them but by putting negative comments on their permanent records in the banking industry, which has prevented them from finding other jobs with banks and financial firms. There is an ongoing Senate inquiry over the issue. Wells Fargo has said it is disturbed to hear such reports and is also looking into the matter.

Meanwhile, Wells Fargo has opened an Office of Ethics, Oversight and Integrity to oversee internal investigations and implement better monitoring systems to try to prevent future scandals. </s> Wells Fargo admitted today that an additional 1.4 million fraudulent accounts may have been created by its employees over an eight year span, in addition to the 2.1 million such accounts that were revealed last year.

The new figure is the result of a second company investigation that delved into 165 million retail banking accounts that were opened between January 2009 and September 2016, the company said in a statement. The original 2.1 million fake accounts were found during a separate study of 93 million accounts that were created between May 2011 and 2015.

In order to make the false accounts appear legitimate the workers accessed their customer's personal records and created fake email addresses and enrolled the accounts in various online banking programs using the names and personal information of actual Wells Fargo customers. Debit cards and PINs were also issued in the customer's name.

The scheme resulted in about 130,000 customers being charged fines for having insufficient funds and overdraft fees on the fake accounts that they did not know existed in their names. Customers were also charged finance and interest charges on the unauthorized cards created in their name.

The new study found additional 60,000 people had been similarly charged. Wells Fargo said in a statement these victims will be reimbursed.

“We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank,” said Wells Fargo CEO Tim Sloan.

Sloan replaced John Stumpf, who was forced out of his position by the scandal that also saw 5,300 Wells Fargo employees fired. In addition, the Consumer Financial Protection Bureau fined the company $185 million. The Bureaus report found that employees created the false accounts in order to meet sales goals.

“Spurred by sales targets and compensation incentives, employees boosted sales figures by covertly opening accounts and funding them by transferring funds from consumers' authorized accounts without their knowledge or consent, often racking up fees or other charges,” the CFPB wrote. </s> An internal investigation at Wells Fargo revealed that the bank’s fake account scandal is a much larger issue than anyone thought.

Nearly a year ago, the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the city and county of Los Angeles levied a $185 million fine against Wells Fargo for 5,000 of the bank’s former employees opening as many as 2.1 million accounts without authorization in order to get sales bonuses.

As it turns out, the number of potentially fake accounts was actually 3.5 million – 1.4 million more than first thought.

In the wake of the bank’s fine, the bank’s CEO and chairman John Stumpf resigned, the bank revoked the 2016 bonuses for its top executives, clawed back even more money from several top execs, fired four senior managers in February, tossed out another two executives in March, and split the role of chairman and CEO after Stumpf stepped down.

The bank is also nearing a $142 million settlement in a class action lawsuit brought by the customers affected by the fake accounts.

The bank also launched an independent investigation into the fake account issue, and back in March, the bank warned that the investigation could show that there were more fake accounts opened by the bank’s employees.

The results of Wells Fargo’s investigation, released Thursday, show exactly that.

According to the bank, its original account analysis reviewed 93.5 million current and former customer accounts opened in an approximately from May 2011 through mid-2015, and found approximately 2.1 million “potentially unauthorized” accounts.

But the bank expanded its investigation to cover a longer period of time – from January 2009 through September 2016. That investigation revealed that there were approximately 3.5 million potentially unauthorized consumer and small business accounts opened during that time.

According to the bank, this new investigation “erred on the side of customers” by conducting “data-driven” analysis and looking at account usage patterns of consumer and small business checking, savings, and unsecured credit card and line of credit account data.

The expanded investigation found that not only were there more total potentially fake accounts opened, there were actually more fake accounts opened in the original review period than first thought.

During the original time period, from May 2011 through mid-2015, Wells Fargo’s investigation found that there were actually 2.55 million potentially fake accounts opened, up from the 2.1 million fake accounts originally thought to be opened during that time.

The expanded investigation found that in the time period outside of that original window, from January 2009 all the way through September 2016, there were 981,000 potentially fake accounts opened.

According to the bank, of those 3.5 million potentially fake accounts, approximately 190,000 accounts incurred fees and charges, up from 130,000 previously identified accounts that incurred fees and charges. The bank said that it will provide a total of $2.8 million in additional refunds and credits in addition to the $3.3 million previously refunded as a result of the original account review.

But that wasn’t all the new investigation found.

The expanded analysis included a review of online bill pay services, as required by the consent orders signed as part of the original CFPB fine.

That review found that during the nearly eight-year review period, the bank engaged in approximately 528,000 potentially unauthorized online bill pay enrollments. The bank said that it will refund $910,000 to customers who incurred unauthorized fees or charges during the time.

In addition to the original remediation efforts, Wells Fargo said that already provided more than $3.7 million in refunds and credits to customers for complaints and mediation claims from Sept. 8, 2016, through July 31, 2017.

“We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank,” Wells Fargo CEO Tim Sloan said in statement.

“To rebuild trust and to build a better Wells Fargo, our first priority is to make things right for our customers, and the completion of this expanded third-party analysis is an important milestone,” Sloan continued. “Through this expanded review, as well as the class action settlement, free mediation services, and ongoing outreach and complaint resolution, we’ve cast a wide net to reach customers and address their remaining concerns. Our commitment has never been stronger to build a better bank for our customers, team members, shareholders and communities.”

Wells Fargo said that it will so begin communicating with affected customers who are part of class action lawsuit that led to a $142 million settlement to ensure that they receive their part of the settlement.

Wells Fargo also encourages customers who believe they had a fake account opened in their name to contact the bank to receive appropriate remediation and compensation.

“As always, we welcome – and encourage – customers with questions or concerns to visit a branch or call our contact center,” Sloan added. “There is nothing more important to me and to Wells Fargo than rebuilding trust with our customers and helping them succeed financially. We are working hard to ensure this never happens again and to build a better bank for the future.” </s> The scope of Wells Fargo's fake accounts scandal grew significantly on Thursday (31 August), with the bank now saying that 3.5 million accounts were potentially opened without customers' permission between 2009 and 2016.

That's up from 2.1 million accounts that the bank had cited in September 2016, when it acknowledged that employees under pressure to meet aggressive sales targets had opened accounts that customers might not have even been aware existed.

People may have had different kinds of accounts in their names, so the number of customers affected may differ from the account total.

Wells Fargo said Thursday that about half a million of the newly discovered accounts were missed during the original review, which covered the years 2011 to 2015.

After Wells Fargo acknowledged the fake accounts last year, evidence quickly appeared that the sales practices problems dated back even further. So Wells Fargo hired an outside consulting firm to analyse 165 million retail bank accounts opened between 2009 and 2016.

Wells said the firm found that, along with the 2.1 million accounts originally disclosed, 981,000 more accounts were found in the expanded timeline. And roughly 450,000 accounts were found in the original window.

The scandal was the biggest in Wells Fargo's history. It cost then-CEO John Stumpf his job, and the bank's once-sterling industry reputation was in tatters. The company ended up paying $185m (£143.7m) to regulators and settled a class-action suit for $142m.

New managers have been trying to amends with customers, politicians and the public. But it's been tough, as new revelations keep coming.

Wells Fargo said last month that roughly 570,000 customers were signed up for and billed for car insurance that they didn't need or necessarily know about. Many couldn't afford the extra costs and fell behind in their payments, and in about 20,000 cases, cars were repossessed.

Other customers have filed lawsuits against Wells Fargo saying they were victims of unfair overdraft practices. Wells Fargo is also still under several investigations for its sales practices problems, including a congressional inquiry and one by the Justice Department.

Wells Fargo said Thursday that of the 3.5 million accounts potentially opened without permission, 190,000 of those incurred fees and charges. That's up from 130,000 that the bank originally said. Wells Fargo will refund $2.8m to customers, in addition to the $3.3m it already agreed to pay.

In addition, San Francisco-based Wells admitted that 528,000 customers were likely signed up for online bill payment without authorisation. It'll refund $910,000 in fees to those customers.

Since last fall, Wells has changed its sales practices, ousted other executives and called tens of millions of customers to check on whether they truly opened the accounts.

"To rebuild trust and to build a better Wells Fargo, our first priority is to make things right for our customers, and the completion of this expanded third-party analysis is an important milestone," Wells Fargo CEO Tim Sloan said in a statement. </s> The scope of Wells Fargo's fake accounts scandal grew significantly on Thursday, with the bank now saying that 3.5 million accounts were potentially opened without customers' permission between 2009 and 2016.Wells Fargo also acknowledged that roughly half a million of the newly discovered accounts were missed during the original review of the years 2011 to 2015 when the bank admitted the scandal nearly a year ago.After Wells Fargo said last year that its employees under pressure to meet aggressive sales targets had opened up to 2.1 million accounts between 2011 and 2015 without getting customers' permission, evidence quickly appeared that the bank's sales practices problems dated back even further.So Wells Fargo last year hired an outside consulting firm to do an analysis of 165 million retail bank accounts opened between 2009 and 2016.The firm found that, along with the 2.1 million accounts originally disclosed, 981,000 more accounts were found in the expanded timeline of 2009 to September 2016, Wells said. And roughly 450,000 accounts were found in the original window.Of the 3.5 million accounts potentially opened without permission, 190,000 of those incurred fees and charges, Wells said. That's up from 130,000 that the bank originally said. Wels Fargo will refund $2.8 million to the affected customers, in addition to the $3.3 million the bank already agreed to pay.In addition, Wells admitted that 528,000 customers were likely signed up for online bill payment without authorization as well. The bank will refund $910,000 in fees to those affected customers."To rebuild trust and to build a better Wells Fargo, our first priority is to make things right for our customers, and the completion of this expanded third-party analysis is an important milestone," Wells Fargo CEO Tim Sloan said in a statement.Wells Fargo has been trying to repair its reputation since the admission about the possibly fake accounts last fall. The company ended up paying $185 million to regulators and settled a class-action suit for $142 million. </s> Image copyright AFP

Wells Fargo's chief executive, John Stumpf, is to resign immediately in the wake of a scandal over its sales practices, the bank has announced.

The bank is investigating how two million accounts were opened without customers' permission.

Last month, it said Mr Stumpf, who was paid $19.3m last year, would not receive a salary during the inquiry.

He will be succeeded by the bank's current president and chief operating officer, Timothy Sloan.

The bank's independent chairman, Stephen Sanger, will take over as board chairman.

Last month, Wells Fargo was fined $185m and accused of "widespread illegal practice" by US regulators.

The fine imposed on the bank by the US Consumer Financial Protection Bureau was the largest to date by the watchdog.

"While I have been deeply committed and focused on managing the company through this period, I have decided it is best for the company that I step aside," Mr Stumpf said.

Image copyright Getty Images

Wells Fargo has fired more than 5,000 staff in response to the scandal.

The bank has said it will be contacting every deposit customer across the country to see if their accounts were properly authorised.

It will also contact hundreds of thousands of customers with valid credit cards to see if they want or need those cards.

In the future, confirmation emails will be sent to customers within one hour of the opening of a new deposit account.

The bank's former head of retail operations, Carrie Tolstedt, has forfeited $19m of bonuses and left without a payoff.
The scandal over improper practices of unauthorized accounts at Wells Fargo extends to thousands of small-business owners.