Jay Patterson, a forensic accountant and consumer lawyer who has been investigating big financial institutions for many years, makes it a point to only do business with small local banks in Little Rock, Arkansas. He was shocked in June 2022 to receive a Wells Fargo bank statement showing that he had $12 in an “Everyday Checking Account” in his name. This account was not one he knew about, and he never opened it.
Patterson called Wells Fargo immediately, a bank that he had often examined in his professional work. The account was closed. He said he kept investigating, and learned things about banks’ collection of financial data that even he as a finance expert had not known.
In public complaints, other consumers have described similar mysterious Wells Fargo accounts. This raises new questions about the compliance and risk management of a bank that’s been rocked with scandals over the past few years. In 2016, Wells Fargo opened millions of unauthorized accounts to meet their sales targets. John Stumpf was fired as the CEO of the bank in the wake of these woes.
Wells Fargo has been found to have committed additional infractions and system failures, which will cost it billions of dollars in fines and penalties. The bank has settled claims that it illegally repossess military members’ vehicles. It was also found to have charged auto owners for insurance when they did not need it and stopped home loan payments of borrowers without their consent during Covid.
Wells Fargo settled allegations by the Consumer Financial Protection Bureau of abuses against 16 million accounts in December last year. The Federal Reserve Board, America’s leading financial regulator, decided to cap Wells Fargo assets amid the scandals. This cap is still in place.
Patterson’s case is different from previous Wells Fargo unauthorized account mess in that it involves existing customers who have shared their personal data with the bank. Patterson says he is not a Wells Fargo client and has never shared his personal information with the bank.
Patterson’s Wells Fargo appears to be an example of synthetic identity fraud, where impostors create a new identity using real and fake information such as names and Social Security numbers. They also use birth dates, drivers’ licenses, and other personal details. These new identities are used to launder money, fund terrorism, or defraud financial organizations, government agencies, or individuals., according to a Government Accountability Office report.
To prevent fraud and money-laundering, banking regulations require financial institutions verify the identity of customers before opening accounts. As is common in fake identity fraud, Patterson’s Wells Fargo account opened with an unauthorized Social Security number, name and address. Date of birth, email addresses and details on the driver’s licence were incorrect. The account was closed before thousands of dollars were withdrawn. Patterson suffered no direct financial loss.
Experts say that this erroneous data should have raised a red flag at Wells Fargo prior to the account being created.
Banks who allow fake identities to be used to open accounts are allowing fraudsters to do illicit activities.
She added that it will be up to the jury to determine whether or not the bank has met its legal obligations and regulations in the Patterson case.
Wells Fargo spokesperson Amy Bonitatibus said that in a recent statement that accusations of illegal activity by the bank are unfounded and that identity fraud is an industry-wide problem that they are working to reduce.
She said that Wells Fargo invests millions of dollars each year to combat fraud and improve our ability to respond quickly to criminal activity. When we become aware of fraud, we act to protect the consumer.
complaints to the CFPB indicate that Patterson is not the only one who has had a bogus Wells Fargo account opened in his name. During the time that his Wells Fargo was active, over 40 consumers who were not identified notified the CFPB about mysterious accounts the bank opened in their name. Some claimed that the bank informed them about the accounts.
In June 2022, a Colorado consumer wrote that Wells Fargo opened an unauthorised checking account under their name. “One Wells Fargo representative actually told me to hire an attorney if I want any information from Wells Fargo!”
Patterson is also in the dark as to who opened his mysterious account. Patterson told NBC News that Wells Fargo refused to tell him anything about the account, including when it was created, who set it up, and what type of money passed through it. In a letter sent a few months later, they acknowledged that it was a fraud.
Wells Fargo has not revealed how many accounts similar to Patterson’s were opened. In the 2016 scandal bank employees opened 1,5 million bank accounts and 565, 000 credit card accounts without customers’ permission. Wells Fargo claims to serve one third of U.S. households.
Patterson was introduced to Early Warning Services LLC by his investigation of an unauthorized Wells Fargo Account. This little-known Arizona firm is owned by seven of America’s largest banks including Bank of America Capital One Financial JPMorgan Chase, and Wells Fargo. Early Warning Services is the owner of the Zelle Network Payment System and collects vast quantities of financial data from consumers to provide identity authentication services to banks.
Early Warning provides detailed reports of the consumer’s banking activity upon request. Patterson obtained his records, which showed that the Wells Fargo phony account was opened on March 20, 2022 and approximately $5,000 had been transferred through it. The Early Warning report reviewed by NBC News shows that three payments totaling $15,000 were returned due to insufficient funds.
Patterson wonders whether they punished him. Patterson filed a lawsuit against Wells Fargo on August 1, claiming that the company stole his personal data and caused him harm by reporting the fake transactions as his. The lawsuit claimed that Early Warning had verified Patterson’s incorrect personal data with Wells Fargo and Wells Fargo provided transaction information from an unauthorized account.
Early Warning’s spokeswoman declined to comment. Bonitatibus, a spokesperson for Wells Fargo, said that the allegations of illegal activity in this lawsuit are without merit.
Patterson’s suit seeks to obtain class-action status. Theodore O. Bartholow III, Patterson’s lawyer from Kellett & Bartholow said that Wells Fargo and Early Warning often talk about the importance of information security and protecting sensitive consumer information.
Patterson, a forensic accounting expert, said that he was surprised at the creation of the account. How can a bank open an account for someone who does not have the correct information? He asked, “How did it get through?”
Despite Wells Fargo’s assurances that the account was closed, Patterson’s mystery account seems to have continued to exist. In October last year, Patterson received a letter from Wells Fargo, telling him that the bank had closed the account three months earlier. The letter stated the new address was “in response to you request.” It was the same address that Wells Fargo had used to open the account.