The Suspicious Statement That Sparked a Lawsuit
Bernard “Jay” Patterson, a forensic accountant and certified fraud examiner, had no prior dealings with Wells Fargo when he received a bank statement for a bank account in his name. His expertise, honed in various lawsuits, including those involving Wells Fargo, prompted him to delve into the matter.
Unveiling the Lawsuit Allegations
In a lawsuit filed in California, Patterson alleges that Wells Fargo created fraudulent accounts for thousands of individuals, including many who were not customers. This accusation comes after regulators fined the bank $3 billion in 2020 for generating millions of fake accounts to accrue fees and interest.
The lawsuit contends that Wells Fargo, in collaboration with a Sacramento credit reporting agency also named as a defendant, employed both fake and real personal identification information to open unauthorized accounts. In Patterson’s case, the lawsuit alleges that his genuine name and social security number were combined with falsified driver’s license data and a fabricated birth date.
Bank Account Fraud
Opening the fake accounts allegedly allowed Wells Fargo to access confidential data from the Sacramento agency, Early Warning Services, which compiles consumer and business banking information from nearly all U.S. banks and credit unions, according to the lawsuit. Early Warning is accused of providing fraudulent identity verification services that lent an undeserved appearance of legitimacy to the fake accounts.
One of the lawsuit’s claims is that the bank used these bank accounts for covert electronic funds transfers, implying involvement in a money-laundering scheme.
Seeking Justice and Accountability
Patterson, a resident of Arkansas, seeks class-action status for the lawsuit, aiming to include thousands of others. The lawsuit, filed in U.S. District Court in San Francisco, accuses Wells Fargo and Early Warning of various offenses, including racketeering under the federal RICO Act. Patterson seeks unspecified damages and a court order compelling Wells Fargo to purge his and others’ data, as well as to notify third parties that they received fraudulent information.
Wells Fargo and Early Warning Respond
Wells Fargo has stated that it is reviewing the lawsuit and declined to provide further comment. The bank mentioned that identity theft is a widespread issue and that it invests heavily in fraud prevention efforts.
On the other hand, Early Warning, co-owned by Wells Fargo and six other major banks, previously labeled the claims against it as baseless and without legal merit, vowing to vigorously defend against them.
The Broader Implications and Past Scandals
Patterson’s lawsuit emphasizes the value of the identity information purported victims provide, including banking balance and transaction histories going back years, all of which are considered valuable consumer data for Wells Fargo, a bank known for marketing its financial products aggressively.
For Patterson, the unexpected bank statement arrived as he and his wife were in the process of securing a home mortgage, and it advertised Wells Fargo’s mortgage loan products.
Chronicling Wells Fargo’s History of Consumer Abuse
The lawsuit highlights Wells Fargo’s checkered history of consumer abuse, including the fake accounts scandal that led to a $3 billion settlement in 2020 and various other settlements totaling hundreds of millions of dollars. The bank was also slapped with a $1 billion fine in 2018 for mortgage and auto-loan abuses and had to refund tens of millions of dollars to customers the same year over fees for add-on products, such as pet insurance.
Wells Fargo’s Ongoing Challenges
Furthermore, Patterson’s case differs from the previous unauthorized accounts scandal at Wells Fargo. In this instance, the victims were existing customers who had shared their personal information with the bank. In contrast, Patterson, who has never been a Wells Fargo customer, contends that he has never provided the bank access to his personal data.
This situation appears to be a case of synthetic identity fraud, wherein impostors create new identities using a combination of real and fake personal information to engage in illicit activities, such as money laundering or defrauding financial institutions. Banking regulations mandate that financial institutions verify customers’ identities before opening accounts to prevent fraud and money laundering. However, in Patterson’s case, some of the information used to open the unauthorized Wells Fargo account was correct, including his name, address, and social security number. Still, other details, such as the date of birth, email address, and driver’s license information, were falsified.
A Deeper Dive into the Regulatory Landscape
The lawsuit points out that this erroneous information should have triggered red flags at Wells Fargo before creating the account. Patterson himself only discovered the issue when he received a bank statement for an account he had not opened. Concerned about identity theft, he obtained credit reports from various agencies, but none showed the new account with Wells Fargo. However, when he checked his report from Early Warning, he discovered that the bank had used the account for electronic funds transfers, which had not been reflected on his statement. The lawsuit claims that Wells Fargo also attempted multiple transfers, all of which failed due to insufficient funds, adversely affecting Patterson’s credit rating.
Examining Public Complaints and Scrutiny
Other consumers, in public complaints to regulators, have reported similarly mysterious Wells Fargo accounts, raising concerns about the bank’s compliance and risk management practices. In recent years, Wells Fargo has faced numerous scandals, including the unauthorized accounts scandal that came to light in 2016 and led to the removal of its CEO at the time, John Stumpf.
The bank has also been fined billions for other improprieties and system failures, including illegal car repossessions, unnecessary insurance charges, and improper handling of borrowers’ home loan payments during the COVID-19 pandemic. Despite these challenges, Wells Fargo continues to grapple with its past, with regulatory restrictions still in place.