Huge Cross-Selling Scandal Sends Warning to Entire Banking Industry

Wells Fargo faces intense scrutiny for its aggressive cross-selling culture. Federal investigators, regulators and state attorneys are all looking into whether the megabank broke the law when pushing additional products and services on customers. Could your cross-selling strategy make you the target of a Federal probe?

Wells Fargo is well-known in the banking industry for its cross-selling strategy, and has long been held up as one of the most admired institutions for its product penetration rates.

Subscribe TodayIn the first quarter of 2015, Wells Fargo claimed that its retail customers held an average of 6.13 products per household, down only slightly from 6.17 a year prior. The 2014 annual report to Wells Fargo shareholders touts 7.2 products per relationship in the bank’s corporate and institutional banking division. Their wealth, brokerage and retirement unit boasts over 10 products per retail banking household.

Among several cross-selling initiatives Wells Fargo has rolled out since cross-selling became a focus back in the 1990s includes one dubbed “Going for Gr-eight,” where employees are encouraged to sell up to eight separate solutions to each customer. A brochure the bank published states: “Our average retail banking household has about six products with us. We want to get to eight… and beyond. One of every four already has eight or more. Four of every 10 have six or more.”

But now all their success with cross-selling has landed them in hot water.

In May of this year, the city of Los Angeles filed a lawsuit against Wells Fargo accusing them of pressuring its retail bank employees to commit fraudulent acts — such as opening customer accounts without their approval — in order to meet the company’s aggressive cross-selling goals.

Branch employees had to sell a certain number of financial products each day, according to the complaint, even if there wasn’t enough foot traffic to meet those quotas. Employees were apparently also encouraged to sell multiple products to friends and family members through “ghost accounts.”

Employees misused customers’ confidential information and often failed to close unauthorized accounts despite complaints, the suit said. Some employees raided customer accounts for money to open more accounts, according to court papers.

Other tactics alleged in the 19-page complaint include “sandbagging,” the practice of “failing to open accounts when requested by customers, and instead accumulating a number of account applications to be opened at a later date.” There’s also “bundling,” which is “incorrectly informing customers that certain products are available only in packages with other products.” And then there is “pinning,” where employees would generate PINs so they could enroll customers in online banking and bill pay without their consent, then log in using the assigned PINs to make it appear as if the service had been activated (a qualifying condition for theses cross-sold products to count towards employees’ quotas).

Los Angeles city attorney Michael Feuer says the bank forced employees “to do whatever it takes,” to the point that managers “constantly hound, berate, demean and threaten employees to meet unreachable quotas.” Indeed, the complaint asserts that daily sales for each branch and each employee were reported and discussed by Wells Fargo district managers four times a day — at 11 am, 1 pm, 3 pm and 5 pm.

In the complaint, the municipality says Wells Fargo has for years “victimized their customers by using pernicious and often illegal sales tactics to maintain high levels of sales of their banking and financial products,” often resulting in monthly service fees on accounts customers never authorized. Any uncollected fees would get sent to collections and credit reporting agencies.

The lawsuit claims Wells Fargo has created “a virtual fee-generating machine, through which its customers are harmed, its employees take the blame, and Wells Fargo reaps the profit.”

Maged Nashid, a former Wells Fargo manager who claims he was fired for questioning the bank’s cross-selling policies, said employees who opened fraudulent accounts usually attached them to bogus mailing addresses so customers wouldn’t receive a notification.

“The client would never be aware of it,” Nashid told the LA Times. “The only way to actually find out about it is through online banking.”

Feuer, the attorney for the city of LA, says Wells Fargo was so obsessed with growth that they “often elevated profits over the legal rights of its customers,” and is unrepentant. The suit he filed says the bank “has done little, if anything, to terminate these practices, nor to reform the business model it created that has fostered them.”

“On the rare occasions when Wells Fargo did take action against its employees for unethical sales conduct, Wells Fargo further victimized its customers by failing to inform them of the breaches, refund fees they were owed, or otherwise remedy the injuries that Wells Fargo and its bankers have caused,” according to the suit.

The city charged that Wells Fargo’s behavior violates California’s unfair competition law and is asking the court to assess a $2,500 civil penalty for each unlawful act along with restitution for affected customers.

The pushy cross-selling culture at Wells Fargo first fell under scrutiny following reports of abuse in the Los Angeles Times back in 2013. “Employees said they also open accounts they knew customers didn’t want, forged signatures on account paperwork and falsified phone numbers of angry customers so they couldn’t be reached for customer satisfaction surveys,” the Los Angeles Times reported.

Accusations against Wells Fargo don’t stop at the consumer level either. Employees say managers regularly threatened employees about meeting sales quotas, with those hitting targets getting preferential treatment, while those who didn’t were punished (e.g., not being allowed to take breaks).

Back in April, Wells Fargo reportedly dropped its quota from 20 products a day down to 15, amid complaints from employees.

From Bad to Worse: The Probe Expands

Now regulators at the federal level are also piling on. The Office of the Comptroller of the Currency and the San Francisco Federal Reserve are conducting their own investigations into the approach Wells Fargo has towards sales. Other municipalities and state governmental bodies are also looking into cross-selling strategies employed by financial institutions, and the federal Consumer Financial Protection Bureau could be next.

Wells Fargo isn’t the only one in the crosshairs either. Earlier this year, JPMorgan Chase received subpoenas and other inquiries from the Securities and Exchange Commission and other regulators about how it sells its own mutual funds and other proprietary products.

Will Wells Fargo tone down its atmosphere of boiler room sales tactics? Or will regulators do that for the bank? That remains to be seen. In the meantime, the bank denies any wrongdoing, saying it operates with only the best interests of its customers in mind and will defend itself in court.

In an interview with the San Francisco Chronicle, Wells Fargo CEO John Stumpf admitted that some employees might have crossed the line, but rejects the idea that the bank has a systemic ethical problem with its sales culture.

“Our people should be thinking of themselves as financial doctors, and not salespeople,” Stumpf said. “They should offer products after they hear what a customer needs. But I don’t want anyone ever offering a product to someone when they don’t know what the benefit is, or the customer doesn’t understand it, or doesn’t want it, or doesn’t need it, that helps no one. That just makes our cost go up.”

“We have a lot of training with our people, but not everybody is going to do everything right every minute of every day,” Stumpf added.

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This article was originally published on December 15, 2015. All content © 2018 by The Financial Brand and may not be reproduced by any means without permission.


  1. Man, you hope for the sake of the industry that stories like this turn out to be proven untrue. Usually when there is that much smoke, there is a fire somewhere though. Hopefully there aren’t any banks out there with a cross-selling strategy that includes opening accounts for consumers that they didn’t authorize. That really isn’t cross-SELLing.

  2. The potential problem is incentives/quotas. If either is too aggressive, some employees may engage in some rather reckless behavior to hit their numbers.

    Since Wells Fargo’s success with cross-selling was a staple part of CEO Stumpf’s stump speech to shareholders, you can be sure this was a major internal area of focus.

  3. I work for a bank. Not this one, but a major bank outside of the U.S.

    We have sales goals we have to meet. We also have blitzes that happen periodically to push different products.

    Prizes won include points toward merchandise you can purchase on an internal site, tickets to sporting events, gift cards, or just lunch for the branch or lunch with the manager.

    No actual cash is exchanged, however, the better your sales are in each quarter, the bigger your bonus.

    There are people who are very good at confusing customers into obtaining quite a few products and services. These are the employees who can get away with anything because they drive the sales of the branch.

    There are then the people like myself who are good at explaining things, empathetic to customers needs and priorities, and will allow customers to make their own decisions based on the information I provide for them. I will not push. I will not prod. I will always be completely upfront and honest. I will look for ways I can save a customer money every single time. I will also report when I see unethical practices being done.

    Many times I am refunding a lot of money to 18 year olds who were told to add overdraft protection to their account, but of course to do that they lose their unlimited transaction no fee child account that they are eligible for until 19. All of the sudden, they are being hit with fees upwards of 50-60 a month for a supposedly “free” account. They were not informed that by putting overdraft protection on their account that the new account now has transaction limits.

    It’s a horrible experience for customers.

    We are supposed to be the experts. Customers come to us for advice.

    We in turn feed them to the wolves.

    It’s terrible. And this is all banks. Do not fool yourselves into thinking this is just Wells Fargo.

    If you don’t meet your sales quota you run the risk of having your hours cut, you end up in your managers office for additional coaching, and it’s a constant barrage of “assistance” that really doesn’t help.

    If a branch doesn’t meet their own sales targets, hours are cut from the branch.

    Less employees mean longer wait times for customers.

    Longer wait times equal dissatisfaction amongst customers.

    When customers are dissatisfied, they leave.

    There is no loyalty because we aren’t being honest to deserve it in the first place.

    So – this isn’t just a company culture, this is banking culture.

    I am writing this anonymously because I fear that if I say anything negative about my place of employment it will come back to me and I will have my job terminated.

    I do love my job though. I love my coworkers. I love my customers. I do not, however, love the sales atmosphere.

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