New Wells Fargo Fraud Involves Insurance Scandal

Yet again there is more fallout from the Wells Fargo phony account scandal.  Numerous media outlets from the New York Times to the Wall Street Journal are reporting a new scandal linked to Wells Fargo. In addition to the initial congressional investigation concerning phony accounts (see here and here) and the more recent CFPB report (see here), U.S. insurer Prudential Financial is now investigating whether Wells Fargo employees signed up customers for its life insurance policies without their knowledge. According to a wrongful termination suit filed in New Jersey state court by three former managers in Prudential’s corporate investigation division, in some cases, policies were opened and closed after a month or two and then reopened, and sometimes monthly fees were withdrawn from the accounts, according to evidence in the lawsuit.

Sales practices at Wells Fargo have been under a spotlight since September when federal regulators ordered the San Francisco-based bank to pay $190 million in fines and restitution. Regulators had said the high pressure sales environment pushed employees to open as many as 2 million deposit and credit card accounts without customers’ permission.

According to Prudential Financial, the insurer had been monitoring its business with Wells Fargo since last year after internal customer surveys had shown unusual lapse rates linked to Wells Fargo accounts. The three managers say they were fired in November for trying to escalate their discoveries internally within Prudential. Prudential states the three were fired for, “appropriate and legitimate” reasons that were entirely unrelated to Prudential’s business with Wells Fargo.  The truth will hopefully emerge through Court proceedings and discovery. However, Wells Fargo and its sales culture continue to come under new and increased scrutiny from both internal and external forces.  One can only imagine the next scandal that will involve Wells Fargo.