In his 2010 letter to shareholders, Wells Fargo’s chief executive answered a question he said he got a lot. Why did the bank want every household to hold eight of its products? “The answer is, it rhymed with ‘great.’”
The average household was at 5.70. “Even when we get to eight,” he wrote, “we’re only halfway home.”
The bank called the strategy cross-selling, and it said so proudly: it was “the foundation of our business model.” Staff had sales targets, and pay incentives tied to hitting them.
What happened at the branches had its own name inside the bank: “gaming.” According to the Justice Department, employees forged customer signatures to open accounts. They created PINs to activate debit cards nobody had requested. They moved money out of customers’ real accounts into the new ones, so the new accounts looked active. Inside the bank, that was called “simulated funding.” Some changed customers’ phone numbers and addresses, so that neither the customer nor the bank’s satisfaction survey could reach them.
It was not hidden from the top. An internal investigator called it a “growing plague” in 2004. In 2005, another said it was “spiraling out of control.” Senior leaders of the community bank still refused to change the sales model.
In September 2016, the Consumer Financial Protection Bureau announced what the bank’s own analysis had found: roughly 1.5 million deposit accounts and about 565,000 credit card applications that customers may not have authorized. Some customers paid overdraft fees because money had been quietly moved out of their real accounts. The bureau fined the bank $100 million, the largest penalty it had imposed up to then.
That was the beginning. In February 2020, Wells Fargo agreed to pay $3 billion to resolve criminal and civil investigations into practices that had run from 2002 to 2016.
The goal of eight had come with a cheerful rhyme. The bank’s 2012 statement of values made a different promise: start with what the customer needs, not with what you want to sell them. The Justice Department quoted that line when it announced the settlement.