The US Bank pressured its employees for more than a decade to create fake accounts in the name of its clients in order to artificially inflate its sales, a US regulatory agency reported Thursday.
The Consumer Financial Protection Bureau (CFPB) reported that US Bank used customer data to open checking accounts, savings accounts, credit cards and lines of credit without permission. Employees were encouraged to do so in order to meet the bank’s goal of opening multiple accounts for each customer.
The CFPB did not immediately disclose the number of fake accounts, but the bank had to pay $37.5 million in fines and penalties and will have to reimburse customers for any fees charged for creating the fake accounts.
“For more than a decade, US Bank knew that its employees were taking advantage of its customers by illegally using their data to create fictitious accounts,” CFPB Director Rohit Chopra said in a statement.
A US Bank spokesperson said those practices dated back to 2016 and that the bank has made significant improvements to its practices since then. The consent order filed with the CFPB acknowledges that US Bank has made improvements to its sales practices in recent years.
“The action of the CFPB closes an investigation that had been going on for more than five years. We are pleased to put this matter behind us,” said Lee Henderson, a bank spokesman.
The scandal is reminiscent of one at Wells Fargo a decade ago, when the bank was found to have encouraged employees to open millions of fake accounts in order to hit sales targets. The scandal ruined Wells Fargo’s reputation, triggered billions of dollars in fines and led to the resignation of its CEO and then its board of directors.
Wells Fargo has been under strict Federal Reserve supervision ever since and is not allowed to grow much until it corrects its corporate culture. There is no indication that the Fed will lift its tight regulation of Wells Fargo in the foreseeable future.
US Bancorp shares fell 3% on the stock market.