The apparent fraud discovered at Wells Fargo should be instructive to everyone who uses financial services.
Earlier this week, the financial industry was shaken by the news that banking giant Wells Fargo was hit with $185 million in penalties for illegal sales practices. That news was surprising in and of itself; Wells Fargo had a pretty good reputation in financial circles. But much more shocking than the amount of the fine—a pittance in relation to the bank’s revenue—was the reason for the fine: the company was accused of illegally “opening unauthorized deposit and credit card accounts” on behalf of its unsuspecting customers, as reported by
The Wall Street Journal
To pad its performance numbers, regulators allege, the company also issued debit cards with fake personal identification numbers and used fake email addresses to secretly sign up customers for online banking. They even transferred customers’ money to the bogus bank accounts, at times leaving a low balance and triggering overdraft or other charges
Investigations into the company’s banking practices are ongoing, and irate customers are sure to seek remuneration from the company. But even if you don’t bank with Wells Fargo, it’s a good reminder that even big institutions with a lot to lose reputation-wise can stray from the straight and narrow. Let’s take a look at ways to protect yourself.
Do Your Homework
The first and most obvious step is to do a thorough check of any institution that may handle any aspect of your finances. This includes banks, retirement providers, health and life insurance providers, advisors or brokers, and even attorneys and estate planners. The Financial Industry Regulatory Authority, also known as FINRA, runs
, where you can find the regulatory history of any registered representative.
For businesses, check major financial websites and news resources, such as the
, and consult the Better Business Bureau to learn about complaints lodged against certain banks. The Securities and Exchange Commission and Federal Trade Commission also maintain updated information on financial institutions charged with violations. State websites can be helpful as well.
Check Your Credit Report Often
If you’re a Wells Fargo customer, contact the bank to make sure you aren’t affected and don’t have any open accounts you’re unaware of. If not, the best defense you have against this type of illegal activity is general vigilance. Get a free copy of your credit report each year from the three national credit reporting companies (Equifax, Experian, and TransUnion) at
. Look in particular for any accounts you aren’t familiar with, even if they’re empty.
One thing you shouldn’t do is bury your head in the sand, or bury your money in your mattress. While none may have an absolutely perfect record, the vast majority of financial professionals and institutions hold themselves to a very high standard and are held to high standards by regulators as well.