Whenever a customer or bank notices signs of fraud on the customer’s account, the bank is required by law to perform an investigation. It must determine whether criminal activity has occurred and whether the customer was involved. When the customer is involved, the bank immediately closes the account. When the customer is an innocent victim, the bank typically offers at least some assistance in retrieving the stolen money.
According to a former fraud investigator with Wells Fargo, however, that’s expensive and time consuming. Wells Fargo has instead chosen to close all accounts that show signs of fraud — without investigating. That leaves innocent victims cut off from their funds and the evidence they need to prove the fraud.
The former fraud investigator says he complained internally about hundreds of allegedly mishandled investigations. He claims he was fired in retaliation. He recently sued Wells Fargo and his former manager in Portland, Oregon, for unlawful whistleblower retaliation.
He is the first insider to provide public details on this issue, which was taken up by the Consumer Financial Protection Bureau last year. According to a Wells Fargo regulatory filing, the CFPB was investigating whether consumers were harmed by the bank freezing or closing their accounts after signs of fraud were detected.
There have been several dozen consumer complaints to the Federal Reserve, as well. In early February, the Fed cited “widespread consumer abuses” and ordered Wells Fargo to refrain from growing any larger.
According to the whistleblower lawsuit, Wells Fargo intentionally refrained from investigating fraud complaints. Instead, it would “save money by simply closing accounts under the pretext of a ‘business decision.'”
“Improperly closing customer accounts in this manner ensured that customers, not Wells Fargo, were left to absorb the costs of fraudulent activities and unauthorized withdrawals from their checking and savings accounts,” reads the complaint.
The former fraud investigator was fired allegedly for leaving his notebook computer, which contained internal case numbers, on his desk overnight. In retaliation cases, however, it’s common for people to be fired on a pretext, and this was the last in a series of reprimands the man received after making his complaint.
Since his firing, however, he says that Wells Fargo sent in a team of auditors to the Portland office. The office then resumed investigating fraud and stopped closing customer accounts.
Wells Fargo told the New York Times that it takes the concerns of current and former team members seriously and that it is reviewing the lawsuit.
If you are considering blowing the whistle on unethical or illegal behavior at your workplace, we recommend contacting an attorney before you proceed. There are numerous laws that protect whistleblowers, but they can sometimes be hard to navigate.
