September 28, 2016
What areas may banking fraud expert witnesses consult on? These professionals evaluate and opine on commercial banking practices, internal bank policies, credit cards, and more. Their expertise and testimony can be a deciding factor in lawsuits alleging illegal banking practices.
The Consumer Financial Protection Bureau has fined Wells Fargo $100M for illegal banking methods. The bank is charged with pressuring employees to secretly issue over 500K credit cards without the customer’s consent. The illegal compensation incentive for opening unauthorized accounts goes back to 2011. The majority of customers did not notice the unauthorized accounts because WF employees would cancel them before fees started to accumulate.
CFPB Director Richard Corday states: “Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses. Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed. Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences."
Violations covered in the CFPB order include:
Opening deposit accounts and transferring funds without authorization, sometimes resulting in insufficient funds fees.
Applying for credit-card accounts without consumers’ knowledge or consent, leading to annual fees, as well as associated finance or interest charges and other late fees for some consumers.
Issuing and activating debit cards, going so far as to create PINs, without consent.
Creating phony email addresses to enroll consumers in online-banking services.
Modern banking is highly complex, as are the laws and regulations governing them. When a banking institution is called in to court, the banking expert witness is hired to explain these laws and evaluate the practices of the bank in question. This analysis is necessary to determine whether illegal banking practices were committed. In the case of Wells Fargo, illegal banking practices cost the bank $185M million in fines, including a $100M penalty from the Consumer Financial Protection Bureau.