Bank workers and consumer advocates along with elected officials announced Tuesday that the city of Los Angeles will further prohibit the unscrupulous practices of the U.S.’s largest banks thanks to a motion introduced by Councilmember Paul Koretz that will, if approved by the full council “prohibit predatory sales goals by any company doing business with the City of Los Angeles.”
The motion is an addition to the city’s Responsible Banking Ordinance passed in 2012 to protect consumers from foreclosures.
“Attaching sales quotas to banking is bad for consumers and bad for workers; the only ones who profit are the banks themselves,” said Ruth Landaverde, a former Wells Fargo credit manager and Bank of America personal banker, as well as a member of the Committee for Better Banks. “At Wells Fargo, we were forced to push unnecessary mortgage refinancing, auto loans, new accounts and credit cards on customers, and Bank of America required us to open 100 new accounts a month. But by standing together, Los Angeles bank workers like me and consumers who rely on big banks have the power to eliminate predatory practices.”
The action by Koretz follows an action last month, where banking regulators and Los Angeles City Attorney Mike Feuer announced a settlement with Wells Fargo over its illegal sales practices. California State Treasurer John Chiang suspended many of the state’s ties with the bank after Wells Fargo workers and others exposed millions of unauthorized bank and credit card accounts.
City Attorney Mike Feuer announced last month that Wells Fargo will pay $50 million in penalties to the city and county of Los Angeles, and restitution to customers, as part of a settlement. This amount is was on top of at least $135 million in penalties that the bank has also agreed to pay to two federal agencies over similar allegations.
Wells Fargo CEO John Stumpf Wednesday stepped down from his post Wednesday following fall-out about its banking practices.
As part of the settlement, if you are one of the thousands of people who incurred fees as a result of an unauthorized Wells Fargo account, the Consumer Financial Protection Bureau (CFPB) (consumerfiance.gov) has ordered Wells Fargo to refund all of your money. Some payments have already been made; others will be sent in the coming months. Affected customers are not required to take action to get a full refund.
If you suspect that you had an unauthorized account opened, you should visit your local bank branch or call your financial institution.
The bank told news outlets that it had fired 5,300 employees over the last few years related to the shady behavior, which had been a [practice at the financial institution since at least 2011.]
If you are still having an issue, you can submit a complaint to the CFPB online or call toll-free at (855) 411-2372.
Customers of Wells Fargo or any other bank or credit union should always closely monitor their accounts to make sure they don’t see unauthorized products or account activity.
It is also a good idea to periodically check your credit report. Get a free copy of your credit report at AnnualCreditReport.com. You can receive a free credit report from each nationwide credit reporting company once every 12 months.
In addition to the settlement and Koretz’s new legislation, the city of Los Angeles has gone a step further in addressing the pervasive problem of predatory sales goals by prohibiting the practice in all financial institutions and other companies that do business with the city. This ordinance is the first of its kind to address banks’ secretive and harmful practices wholesale–Los Angeles is also seeking to take steps to divest from any bank that uses these tactics.
“Predatory practices that cripple our communities extend far beyond Wells Fargo and persist across the entire industry,” said Los Angeles City Councilmember Koretz. “Changing the law in Los Angeles–a direct result of thousands of bank workers organizing across the country to speak out about predatory practices and abusive sales goals at Wells Fargo and other big banks for years–will protect the financial health of our city and stop banks from swindling our neighborhoods and working families.”
With the introduction of the proposal, the legislation will go to a council for discussion and review.
Over the past few years, bank workers across the country organizing with the Committee for Better Banks have put a spotlight on predatory incentive programs that force them to choose between consumers’ best interests and getting paid a living wage. In Los Angeles, Minneapolis and other cities, the Committee for Better Banks has delivered petitions to bank managers from tens of thousands consumers and workers calling for an end to predatory sales goals, said committee organizers.
This summer, bank workers in the Committee briefed members of Congress and representatives from the Consumer Protection Finance Bureau and the Office of the Comptroller of the Currency on the aggressive sales goals that are forcing bank workers to push unnecessary products on their customers.
Los Angeles is just one of many cities where underpaid bank tellers and managers are operating under hostile work conditions and threats of losing their jobs, if they don’t sell these problematic products. according to the committee. A June 2016 report by the National Employment Law Project analyzed interviews with dozens of frontline bank workers who detailed predatory practices at Wells Fargo, Bank of America and other major banks. The report found that consumer complaints to the Consumer Financial Protection Bureau concerning retail banking increased 34 percent in the last year, while Wells Fargo derived over a quarter of its revenue from predatory fees.
City News Service contributed to this story.