Wells Fargo Class Action Filed By Employees Who Say They Were Fired For Not Committing Fraud
In the wake of a scandal involving fake accounts created for banking customers without their knowledge, Wells Fargo faces class action lawsuits and other legal backlash.
Over the last few days, the company has faced a new lawsuit brought by stockholders, who say its value was artificially inflated, and the major bank has been banned from doing business with the city of Chicago for a year. California has also filed a 12-month sanction against Wells Fargo, removing it as underwriter from two state bonds, among other penalties.
However, the largest action against the bank so far is a $2.6 billion class action lawsuit filed by former Wells Fargo employees, who claim they were fired, demoted, or forced to resign after failing to meet aggressive sales goals which often required opening fraudulent accounts for customers.
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The Wells Fargo class action lawsuit was filed last month in California Superior Court in Los Angeles by two former employees, Alexander Polonsky and Brian Zaghi. The complaint (PDF) seeks to represent both past and current employees who followed financial laws but were penalized by the company for failing to meet sales quotas.
In September, a massive Wells Fargo Bank fraud was revealed, when it was announced that the bank will pay $185 million in fines to the federal government, and return about $2 million in fees to customers who had fake accounts and credit cards set up in their names.
More than two million such ghost accounts and credit cards were made without the knowledge or permission of the customers, who were often then hit with fees and charges for accounts they did not want or know they had. The fraudulent Wells Fargo accounts were reportedly established in response to a bonus structure at the bank, which was encouraged by sales targets and compensation incentives based on new account activity.
There are now a growing number of Wells Fargo lawsuits being pursued by both former employees and customers over the practices.
The company has fired about 5,300 employees whom it says participated in creating the fraudulent accounts. Those employees consist largely of lower level hourly workers, and not top executives, whom many critics say must have encouraged the creation of the fake accounts for it to be such a widespread practice.
However, the lawsuit indicates that many employees were fired, demoted, or forced out when they did not create fraudulent accounts and thus failed to meet the company’s sales goals. The lawsuit claims that Wells Fargo executives were well aware of the practice of creating the fake accounts.
“Wells Fargo’s fraudulent scam which was set at the top and directed toward the bottom was to squeeze employees to the breaking point so that they would cheat customers so that the CEO could drive up the value of Wells Fargo stock and put hundreds of millions of dollars in his own pocket,” the lawsuit states. “Wells Fargo could then place the blame on thousands of $12 an hour employees who were just trying to meet cross-sell quotas that made the CEO rich.”
This latest lawsuit is similar to claims filed by former Wells Fargo employees in 2014, which included charges of wrongful termination and failure to pay over time charges, as well as other labor law violations. Workers represented in the case say that Wells Fargo regional executives told them to open ghost accounts to meet sales targets, and those who refused were sometimes fired.
The charges came to the government’s attention in a lawsuit filed last year by Los Angeles City Attorney Mike Feuer.
WandaJanuary 23, 2017 at 8:42 pm
I worked for Wells Fargo for 3 1/2 years and was fired June 13, 2016. I was intimidated by the service manager and store manager. They treated all of us bad, except for 1 teller. We called HR many times and talked to the District Manager and the President of this area, they did nothing to protect us from the harassment we had to put up with. This is a bad company to work for. The customers in this[Show More]I worked for Wells Fargo for 3 1/2 years and was fired June 13, 2016. I was intimidated by the service manager and store manager. They treated all of us bad, except for 1 teller. We called HR many times and talked to the District Manager and the President of this area, they did nothing to protect us from the harassment we had to put up with. This is a bad company to work for. The customers in this small town are outraged.
DeannaOctober 11, 2016 at 1:16 pm
I have another unusual wrong doing by Wells Fargo. Due to illness, we were involved in a short sale on a business property which had an SBA loan along with Wells Fargo being the lead lender. When the loan was initiated, Wells Fargo required us to have officer life insurance which had an assignment to Wells Fargo. When the short sale happened, Wells Fargo gave the buyer all the collateral on the l[Show More]I have another unusual wrong doing by Wells Fargo. Due to illness, we were involved in a short sale on a business property which had an SBA loan along with Wells Fargo being the lead lender. When the loan was initiated, Wells Fargo required us to have officer life insurance which had an assignment to Wells Fargo. When the short sale happened, Wells Fargo gave the buyer all the collateral on the loan, including my life insurance policy! In Minnesota it is illegal to reassign a life insurance policy to a subsequent party. Even after the error was pointed out, the bank refused to even attempt to take back the life insurance policy as the customer who had the item, was a significant customer to them, and obviously, I was no longer important. We attempted to get the release from the buyer, who refused as mistake or not, it was now assigned to him. Rather than continuing to pay the premiums and face a lawsuit from the buyer should one of us die, our attorney recommended that we drop the coverage, which we did. Due to the significant illness that I suffered, I have not been able to replace the life insurance. This policy was also $2 million policy which could have been sold by us too. It seems really wrong that Wells Fargo could make an error like this, and yet there was nothing we could do.
Nyles and JudyOctober 10, 2016 at 8:16 pm
they sent us a check for 1041.71 which we never asked for. They sent it to us on 03/09/2001.We still have the paper work.
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