US Bank has been fined $37.5 million by the Consumer Financial Protection Bureau, after the Minneapolis-based bank fabricated fake accounts for customers to reach sales targets.
The CFPB said that US Bank retrieved customers’ credit reports without their consent in order to open checking and savings accounts, credit cards, and lines of credit.
Employees were urged to do so in order to help the bank accomplish its aim of selling many products to each customer.
The CFPB did not immediately disclose the scale of the US Banks’ fake accounts case, but the bank was compelled to pay $37.5 million in fines and penalties and would have to repay consumers any fees they paid for the false accounts.
CFPB Director Rohit Chopra said: “For over a decade, US Bank knew its employees were taking advantage of its customers by misappropriating consumer data to create fictitious accounts.”
A US Bank spokesperson said the poor sales practices were a legacy issue at the bank dating back to 2016 and that it has then made significant changes to its sales policies since then.
The CFPB consent order notes that US Bank has made improvements to its sales practices in recent years.
The accusations are very similar to the Wells Fargo sales practices scandal that was revealed in 2016.
Wells Fargo’s sales practices scandal shook the financial world half a decade ago when the bank was exposed to having encouraged staff to establish millions of bogus accounts in order to achieve sales goals.
The controversy tarnished Wells Fargo’s reputation as a well-managed bank during the Great Recession, resulted in billions of dollars in fines, and almost immediately resulted in the departure of the firm’s CEO and, subsequently, its board of directors.
Since the scandal surfaced, the Federal Reserve has been closely monitoring Wells, preventing the bank from expanding further unless it improves its working culture.
Following this news, US Bancorp shares slid three percent in early trade.