LA sues Wells Fargo over 'ghost' accounts, but Wells Fargo says not so fast

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Jun 10, 2015

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LA sues Wells Fargo over 'ghost' accounts, but Wells Fargo says not so fast

L.A. is taking the banking giant to court for employees allegedly opening up bogus accounts in customers' names. But Wells Fargo says L.A. has no business in this suit.

Customers use ATMs at a Wells Fargo Bank branch office on July 12, 2012 in Daly City, California. The Justice Department announced Thursday that Wells Fargo Bank, the largest residential home mortgage originator in the United States, will pay nearly $175 million to settle accusations of discrimination against qualified African-American and Hispanic borrowers between 2004 and 2009. The alleged discrimination is in violation of fair-lending laws.

L.A. is taking the banking giant to court for employees allegedly opening up bogus accounts in customers' names. But Wells Fargo says L.A. has no business in this suit.

A 2013 LA Times investigation found bank employees at Wells Fargo– under pressure to meet quotas by their bosses – opened up bogus extra accounts in customers' names without their permission or knowledge.

In some cases, signatures were forged and fees were racked up, and customers didn't know until collections agencies came knocking.

The city of Los Angeles sued last month on behalf of its affected residents.

However, the bank counters that L.A. has no standing to bring forth this lawsuit; only federal regulators can.

Scott Reckard, reporter for the LA Times, explains what this means for customers who were affected.