Businesshala reported that Wells Fargo would pay $37 million to settle a government lawsuit that accused the baking giant of defrauding 771 businesses and banks, many of which were small and medium-sized, Businesshala reported. .
The filing, filed by the Justice Department in New York federal court, states that the institution generated tens of millions of dollars in revenue turnover on foreign exchange (FX) transactions between 2010 and 2017.
according to suitWells Fargo told these customers that it was charging them certain rates, but in the background, encouraged its salespeople to “charge FX customers more”. The bank will reportedly hide these overcharges, giving them financial benefits.
“As a result of undue incentives and lack of oversight, a culture developed in which Wells Fargo FX sales specialists were comfortable defrauding the bank’s clients repeatedly,” the suit read. “FX sales experts openly discussed and even observed transactions resulting in large FX spreads agreed upon with clients and large FX revenue-generating transactions.”
As per the agreement, most of the funds will be paid as restitution to the affected customers.
It continues a chain of events over the years in which Wells Fargo has faced legal action for alleged abuse.
earlier this month The bank was fined $250 million after the Office of the Comptroller of the Currency failed to implement a mortgage loss mitigation program tied to the 2018 action. The request pertains to a 2016 scam whereby bank employees opened millions of accounts in the names of customers without their knowledge between 2002 and 2016 to meet sales targets.
Since then, the bank has paid out more than $4 billion in penalties.
This act of the bank has stirred up Washington. Democratic Massachusetts Senator Elizabeth Warren has called on Federal Reserve Chairman Jerome H. Powell, asking him to force the bank to divest its personal banking activities from Wall Street’s business interests.
“Every new report of scam and ongoing non-compliance by Wells Fargo represents a giant financial institution squeezing consumers to make profits for its executives,” she wrote. “The only way to keep these consumers and their bank accounts safe is through some other institution – whose business model doesn’t rely on duping customers for every last penny. The Fed has the power to put consumers first, and this Must use it.”
newsweek Contacted Wells Fargo requesting a statement but did not hear back from the bank in time for publication.