What to do if the Wells Fargo scam has cost you money: Internet Scambusters #720
What should you do if you've fallen victim to the Wells Fargo scam in which up to two million customer bank and credit card accounts were set up without their knowledge, so that sales staff could earn bonuses?
Even if you keep your money with another bank, could you also be affected by a similar trick?
We've got the answers for you in this week's issue - plus info on what to do if you think your Yahoo! account has been hacked.
Let's get started...
Are You a Victim of the Wells Fargo Scam Accounts Trick?
Are you one of the thousands of people caught up in the Wells Fargo scam? Perhaps you don't even know. And if you do, do you know what to do to recover any fees you may have been tricked into paying?
We have all the answers for you this week, but first let's start with a recap of what actually happened.
Over a period of years, some sales staff at the bank allegedly opened unauthorized deposit and credit card accounts in customers' names in order to earn commission and sales bonuses - a trick known as "sandbagging."
"(E)mployees 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," explains the U.S. Consumer Finance Protection Bureau (CFPB).
More than two million of these accounts apparently were created, often several of them in a single customer's name.
Subsequently, the CFPB fined Wells Fargo Bank $100 million, plus another $85 million in penalties to the Office of the Comptroller of the Currency and the City and County of Los Angeles.
Behind the scam, which resulted in Wells Fargo firing several thousand employees allegedly involved, is a practice known as cross-selling.
This is a perfectly legitimate process in which organizations try to sell other products to existing customers.
But according to the CFPB, certain employees "illegally enrolled consumers in these products and services without their knowledge or consent in order to obtain financial compensation for meeting sales targets."
In the process, according to the bank's own investigations, money was transferred from customers' own authorized accounts into the newly-created ones.
In some cases, this left insufficient funds in the original accounts, causing customers to be charged overdraft fees.
In other instances, unauthorized credit card accounts resulted in customers having to pay annual fees, interest and other charges they had never signed on for.
Employees allegedly involved also took action to hide their activities by setting up phony email addresses to enroll their victims in online banking services.
The outcome of the discovery is that Wells Fargo must pay full refunds to all affected customers, and change its processes for monitoring sales activities.
The refunds, said to be around $2.5 million total, include all monthly maintenance fees and fees for insufficient funds and overdrafts.
So, to go back to our original question: How do you find out if you're affected and what do you need to do?
According to the CFPB, Wells Fargo has been told it must take responsibility to notify victims and send back their money over the next few months.
But if you're not sure or you suspect an unauthorized account was opened in your name, you should visit or phone the branch where your authorized account is held and ask.
If you're not satisfied with the bank's response or believe there's still an unresolved issue, you can submit a complaint to the CFPB or call toll-free (855) 411-2372.
Concern has also been voiced in some quarters that victims' credit scores could have been affected if, for example, a late payment note was recorded for any of these phony accounts.
So, it would make sense to check out your current credit reports to see if everything is in order. You can do this for free at AnnualCreditReport.com.
Your credit report should include details of all open accounts in your name. If you notice anything amiss, get in touch with your bank immediately.
If your credit score has been affected, you may also need to contact the credit reporting agencies in the same way you would if you were an identity theft victim.
For more information on this, check out this guidance from the Federal Trade Commission (FTC): Disputing Errors on Credit Reports.
And if you're a victim, can you sue?
A couple of lawsuits have already been taken out but, in most cases, it seems highly unlikely you'd be able to proceed.
The reason: When you open a bank account, you almost certainly have to sign an account agreement that includes what is known as an "arbitration clause."
Under this type of clause, the customer agrees that a dispute between you and the bank has to go before a private arbitrator rather than a court.
A recent report on the scam in the Los Angeles Times explains: "Arbitration clauses, usually buried in fine print, have become increasingly common, found in everything from employment to mobile phone contracts. Along with requiring that disputes go to arbitration, the clauses often prohibit customers from joining class-action lawsuits."
The newspaper says that California and federal courts "have ruled arbitration clauses signed by customers when they opened legitimate accounts prevent them from suing even over allegedly fraudulent accounts created without their knowledge."
Of course, Scambusters does not provide legal advice, so if you want to establish your legal position in this dispute, you should consult a qualified legal professional.
Sadly, all of this may not be the end of the story either. According to cable news station CNN, sales teams at other banks have been under similar cross-selling pressure as those at Wells Fargo.
The Wells Fargo scam could turn out to be the tip of an iceberg, so make sure you regularly monitor your bank and credit card accounts and your credit record.
Alert of the Week
Another worrying recent disclosure is the news that 500 million Yahoo! accounts have been hacked.
If you have a Yahoo! account, especially if you haven't changed your password since 2014, change it now, along with any security questions and answers you've set up.
Also, check your account for any suspicious activity.
Needless to say, Yahoo! seems to have buried away its guidance for victims. You won't find it on their home or help pages. But you'll find it here: An Important Message About Yahoo User Security.
That's all for today -- we'll see you next week.