RBC, also known as the Royal Bank of Canada, is one of several banks suspected of opening unauthorized accounts in customers’ names.

The Office of the Comptroller of the Currency (OCC) has investigated over 40 financial institutions for signs of fake bank accounts opened in consumers’ names.

The scandal came to public attention after banking giant Wells Fargo was fined in excess of half a billion dollars when some of its employees were discovered opening “fake” bank accounts in customers’ names.

Last summer, Comptroller Joseph Otting has said that he has uncovered approximately 20,000 accounts that appear to have “compliance irregularities.” Of those, just under half turned out to be unauthorized.

Although the OCC has refused to release further details, customers at Royal Bank of Canada and other financial institutions may want to monitor their account statements for any unauthorized activity.

How and Why It’s Happening

The Wells Fargo scandal broke in 2016. By August of 2017, the institution had reported that approximately 3.5 million checking and credit card accounts had been opened without customers’ knowledge or authorization. According to a report published by CNN Money, that figure was over 65 percent higher than its earlier estimate.

According the OCC, the “fake bank accounts” scandal was due to “short-term sales promotions without adequate risk controls,” a failure to establish policies and procedures and “employee misconduct.”

A great deal of this misconduct is blamed on pressure on employees to meet performance goals and sales quotas. Consumer advocates believe the same situation may exist at RBC and other banking institutions.

RBC, Bank of America and Others

While the OCC has refused to publish or otherwise reveal information on which banks have had unauthorized accounts being opened by employees in customers’ names without their knowledge or authorization, law firms have been conducting their own investigations in anticipation of future litigation. In addition to RBC, banks that are currently targeted in these investigations include:

• Bank of America
• BOK Financial
• Capital One
• HSBC
• TD Bank

What Actions Are Being Taken?

In the case of Wells Fargo, the Federal Reserve put sanctions in place that prevent it from “growing any larger than its total asset size as of the end of 2017”, in addition to fines and penalties. Wells Fargo itself terminated over 5,300 employees and a significant number of district managers in connection with the scandal.

The federal government has done little to bring accountability to banks such as RBC and others; however, legislators at the state and local levels have started to take action. In 2017, the Los Angeles City Council passed an ordinance that requires any bank doing business with the city to provide full disclosure of its policies on sales quotas and employee incentives.

Protecting Yourself

When Wells Fargo employees opened unauthorized accounts, they would transfer funds from the customer’s existing account into the new one without their knowledge. This resulted in unexpected overdraft fees and other fees (for example, if the “fake” account required a minimum balance).

If you notice such fees or new interest charges, that may be a sign that an unauthorized account has been opened in your name. It is also a good idea to monitor your credit report to find out if someone has attempted to open a credit card account in your name.