Class Action: Wells Fargo Defrauds Clients to Meet Sales Quotas

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According to a class action lawsuit filed Wednesday in California federal court, Wells Fargo harms its customers by encouraging its employees to use fraudulent and deceptive tactics to generate sales of their financial products.

Plaintiff Shahriar Jabbari alleges in the class action lawsuit that Wells Fargo’s business model depends on selling multiple banking products, known as “solutions,” to its customers. Each “solution” provides an opportunity for Wells Fargo to make money off of interest, fees and other transactions. Therefore, the more “solutions” it sells to its customers, the more money it is able to generate.

“In order to maximize the number of solutions per customer, and thus maximize its profits, Wells Fargo engages in and promotes a system of unfair, deceptive, illegal, and fraudulent practices,” the Wells Fargo class action lawsuit alleges. “To enroll customers in numerous accounts and services, Wells Fargo and its employees actively misrepresent material facts about financial products, including associated fees and costs, in an effort to induce customers to purchase more ‘solutions.’”

The deception doesn’t stop there, Jabbari claims. “Not only does Wells Fargo deceive its customer about the costs and benefits of particular financial products, the bank also routinely opens customer accounts and issues credit cards without the customer’s authorization or knowledge,” according to the Wells Fargo class action lawsuit. “Then, when customers fail to maintain mandatory account balances, pay fees for accounts they did not know existed, or comply with some other undisclosed policy, Wells Fargo charges the customer a fee.”

According to the Wells Fargo class action lawsuit, the bank takes money from the clients’ other existing accounts to pay these fees, or in some cases sends the “debt” to a debt collection agency.

Jabbari alleges that Wells Fargo imposes unrealistic sales quotas on its employees, creating incentives for its bankers to engage in fraudulent activity to meet the quotas. Currently, Wells Fargo proclaims that its customers hold an average of about six bank accounts or financial products each. The class action lawsuit alleges the bank seeks to increase this to an average of eight accounts through its “Great Eight” or “Gr-eight” initiative. Wealth managers and bankers must meet these sales quotas or else they risk losing pay or even their employment with Wells Fargo, Jabbari asserts.

“Those failing to meet daily sales quotas are approached by management, and often reprimanded and/or told to ‘do whatever it takes’ to meet their individual sales quotas,” the Wells Fargo class action lawsuit says. The immense pressure foreseeably leads Wells Fargo employees to engage in fraudulent, deceptive and illegal conduct to meet these quotas.

Wells Fargo has known about these practices for years, but has failed to take significant measures to stop the fraudulent activity, Jabbari alleges. “As a result of its deceptive and illegal practices, Wells Fargo has generated a fee-generating machine that produces extraordinary profits for the corporation at the significant expense of its customers,” the class action lawsuit says.

Jabbari further argues that Wells Fargo encourages this illegal conduct by creating a centralized database that contains all of the information necessary to open new bank accounts on behalf of a client. This database is allegedly accessible to all employees, even bank tellers. “Not only is this unfettered access to sensitive customer information illegal, it allows Wells Fargo and its employees to easily open new, but unwanted, accounts for existing clients from data that should be protected within the bank.”

The class action lawsuit charges Wells Fargo with violating California’s Consumers Legal Remedy Act, Unfair Competition Law, the Fair Credit Reporting Act, and the California Customer Records Act.

Jabbari seeks to represent a Class of Wells Fargo customers who opened at least one account or purchased at least one financial product due to Wells Fargo’s allegedly fraudulent tactics, and anyone who had one or more unauthorized accounts opened by Wells Fargo.

Jabbari is represented by Matthew J. Preusch of Keller Rohrback LLP.

The Wells Fargo Sales Quota Class Action Lawsuit is Jabbari v. Wells Fargo & Company, et al., Case No. 4:15-cv-02159, in the U.S. District Court for the Northern District of California.

UPDATE: On March 28, 2017, Wells Fargo agreed to pay $110 million to settle 12 separate class action lawsuits that accuse the banking giant of signing up customers for bank accounts they didn’t want and in many cases never even knew about.

UPDATE 2: On April 21, 2017, Wells Fargo expanded the class action settlement that would resolve allegations that the bank opened millions of fake accounts, bringing the total up to $142 million.

UPDATE 3: On May 24, 2017, a federal judge says he will grant preliminary approval to the terms of a Wells Fargo class action settlement, conditional on certain changes. According to the judge, the new agreement should provide more time for settlement administration. Claimants should have more time to file claims, and the court should have more time to evaluate the work of the settlement administrator and its credit injury experts.

UPDATE 4: On July 8, 2017, the $142 million Wells Fargo class action settlement was preliminarily approved by a California federal judge. 

UPDATE 5: September 2017, the Wells Fargo unauthorized bank accounts class action settlement’s website has been established. Click here to learn more about what the settlement provides to Class Members. 

UPDATE 6: On May 30, 2018, a California federal judge granted final approval for a $142 million class action settlement over claims that Wells Fargo opened fake bank accounts, despite many arguments that the settlement is insufficient.