Sandbagging. Gaming. Pinning.
For the last six years, the Consumer Financial Protection Bureau has tracked customers’ complaints about major banks — 159,158 complaints in California alone — and exposed a vicious pattern of deception and greedy practices with names that bear little connection to banking a customer can trust.
No bank evokes these troubling trends better than Wells Fargo, which recently settled a $142 million class action lawsuit for opening millions of accounts without customers’ knowledge or consent.
Investigations by the Justice Department and the Los Angeles City Attorney’s Office uncovered a poisonous internal culture fueled by a top-down system of aggressive sales goals, which mandated frontline bank workers sell as many accounts as possible, no matter the method. But the Wells Fargo scandal shouldn’t have come as a surprise. For years, bank workers had been sounding the alarm.
In the fallout, Wells Fargo finally eliminated its sales goals program.
Ending sales goals at one bank, however, doesn’t address the harsh reality of an industry-wide problem. The truth: America’s biggest banks still use predatory sales quotas. A close look at CFPB’s complaints database reads like a roll call of the nation’s biggest financial institutions — Wells Fargo, but also Bank of America, SunTrust, Citibank, Santander and US Bancorp, among others.
While Wells Fargo’s leadership boasted most loudly about its robust metrics systems, other banks were more quietly using a similar system of carrots and sticks to compel workers to sell as many products as fast as possible. And that’s where Los Angeles’s latest policy venture comes in.
The L.A. City Council is on the cusp of passing a groundbreaking ordinance that requires that banks wishing to do business with the city certify they engage in socially responsible banking, protect whistleblowers who shine a light on dangerous business practices, and do not base worker compensation on sales quotas. With this information, the city — and its taxpayers — can make a fully informed choice about the kind of partner it wants to handle its assets and banking service contracts.
Consumer protections against unethical sales quotas are long overdue. Last year, my organization, the National Employment Law Project, analyzed interviews with dozens of bank workers in branches and call centers across the country — and whether they work for Wells or for Bank of America, the stories are the same.
They explained “sandbagging” (processing customer account applications on the days they count the most towards a quota), “gaming” (opening accounts at any cost to meet a target) and “pinning” (assigning new PIN codes unbeknownst to customers to help add on products later). Workers said they felt sick to their stomachs as they tried to make ends meet on exceedingly low wages that made meeting quotas critical to caring for their own families.
The City Council’s new proposal represents an important first step to rooting out these practices by placing a priority on responsible practices in an industry that, left to its own devices, will likely never relinquish a profitable but ethically dubious status quo. After all, the fees they charge on predatory products represent a significant source of revenue for banks.
As critics point out, in 2013, Americans paid more than $32 billion in bank overdraft fees, surpassing what the country paid for fresh vegetables. Where does that revenue go? The average bank CEO takes home about 455 times the average American worker’s salary each year, and Wall Street investors demand big returns.
But these windfall profits come at the expense of our communities, particularly seniors, low-income families, people of color and students who are often systematically targeted for unnecessary, unwanted products.
Consumer banking should serve the public interest. It’s not enough to simply punish the bad apple — we must work to make sure what happened at Wells Fargo never happens again. With cities like Los Angeles making sure big banks take responsible banking to heart, we might have a real shot.
Anastasia Christman is senior policy analyst at the National Employment Law Project.
This commentary was originally published by the Los Angeles Daily News.