• General
  • September 28, 2021
  • 6 minutes read

Wells Fargo Just Got Fined, Again

Name one thing that occurs so often that you don’t get surprised when you hear of it again? It could…

Wells Fargo logo

Name one thing that occurs so often that you don’t get surprised when you hear of it again? It could be Wells Fargo, the American bank, getting fined by regulators. The bank has been so habitually fined to the extent that it’s paid nearly $22bn in total penalties since the year 2000.

Barely three weeks ago, Wells Fargo was fined $250mn for a loan fraud case going back to 2018. Now, it’s been fined again, this time for overcharging commercial foreign exchange clients.
  • Wells Fargo has agreed to pay a $37.3mn penalty to settle a lawsuit from the US Justice Department (DOJ) accusing the bank of overcharging 771 commercial clients that used its foreign exchange services between 2010 and 2017. 
  • Additionally, the bank will directly reimburse the clients with $35.3mn that it admitted to overcharging them.
Wells Fargo admitted that many of its foreign exchange sales specialists overcharged clients by applying larger conversion margins or spreads than they said they would and then provided false information to the customers that inquired about the higher-than-agreed pricing.
  • The DOJ alleged that Wells Fargo staff cheated the customers by switching digits in the exchange rate to boost the transaction price. For example, let’s say the cost to purchase a pound was $1.357, staff would change it to $1.375 to raise the fees with limited suspicion. 
  • If the customer noticed the digit-switching and then made an inquiry, the DOJ alleged Wells Fargo staff simply brushed it off as a mistake and corrected the price. Ultimately, many customers didn’t notice the error and got cheated, it appears.
  • It’s also alleged that Wells Fargo currency-exchange staff targeted the digit-switching scheme primarily on customers deemed as less sophisticated and experienced in foreign exchange trading, thereby being less likely to notice it.
  • With its settlement, Wells Fargo admitted to the charges brought against it by the DOJ. It speaks to the cutthroat culture that the bank is infamous for, whereby staff are or were encouraged to cut corners and do shoddy things to bolster sales. Though Wells Fargo has tried to distance itself from the culture in recent years, its reputation remains stained.
  • The most obvious example of Wells Fargo’s infamous culture was in 2018 when the bank admitted to fraudulently opening millions of accounts for clients without their consent and charging them for services offered on those accounts. The case has spurred roughly $6bn in penalties levied on Wells Fargo and continues to hunt the bank a few years later.

This case against Wells Fargo was kickstarted by a whistleblower who contacted the DOJ. Wells Fargo said it’s taken disciplinary action against more than 20 employees who participated in the scheme.


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