John Mone
Wells Fargo to pay $1 billion to settle shareholder lawsuit
The lawsuit claimed the San Francisco-based bank failed to take adequate corrective measures following its 2016 scandal involving fake accounts.
LEARN MOREWells Fargo, already tarnished by one scandal, is now grappling with yet another: the revelation of millions of unauthorized bank accounts associated with individuals who are neither clients nor responsible for opening them.
NBC News was the first to report that many phony accounts have popped up at the nation’s fourth-largest bank—this time with clients who didn't bank there. According to the network's report, more than 40 consumers have reported "mysterious accounts" to have been opened under their names.
Adding the accounts appears to be a coordinated tactic by fraudsters to launder money.
"I think this really challenges the risk and compliance departments of the banking system across America because this new trend is technically called synthetic identity fraud, which means they use a combination of fake information and real information to open up accounts," said Ted Jenkin of OxyGen Financial.
Ted Jenkin, who manages financial portfolios worth billions of dollars, says if the findings bear more fruit, it’s another wake-up call that consumers need to maintain a constant watch on their credit reports.
"So, everyone needs to pay attention to their accounts and at least get their credit score once a year to see what accounts may or may not have been opened," said Jenkin.
This also raises questions about whether the bank is properly vetting new accounts and what the entire industry needs to guard against.
"But, you know, across America, what it tells you is that our risk and compliance departments in our banking and financial institutions are highly being challenged by the cyber thieves out there who look like that. They're smarter right now than the banking system itself," said Jenkin.
Wells Fargo is also facing consumer complaints over missing bank deposits, with some taking to social media to excoriate the financial giant.
In response to the report of fake accounts, Wells Fargo says the claims "are without merit," adding that "identity theft is a broad industry problem" and that it spends "hundreds of millions of dollars annually" to fight fraud.
The bank further claimed that it's taking action to protect consumers, but it is unclear just how many people have been affected by this.
