Senators demand answers from U.S. Bank on fake accounts scandal

Sen. Sherrod Brown (D-Ohio), chairman of the Senate Committee on Banking, Housing, and Urban Affairs, and several of his colleagues wrote a letter Thursday to U.S. Bank Chief Executive Andrew Cecere about how they are “deeply concerned” regarding the bank’s conduct of “using consumer data to issue credit cards and lines of credit and to open deposit accounts for consumers without their knowledge or consent.”

Brown was joined in signing the letter by committee members and Sens. Elizabeth Warren (D-Mass.), Catherine Cortez Masto (D-Nev.), Robert Menendez (D-N.J.), and Chris Van Hollen (D-Md.)

In July, the Consumer Financial Protection Bureau (CFPB) fined U.S. Bank $37.5 million for opening deposit accounts and credit cards and accessing consumer credit reports on behalf of existing customers without their knowledge or consent. The alleged practice was driven by U.S. Bank employees who were incentivized to open new accounts to meet sales goals, the CFPB said. The bank paid the fine without admitting or denying wrongdoing.

As part of the settlement with the CFPB, U.S. Bank agreed to devote more resources to its compliance function and to make improvements to its policies and procedures to detect and prevent improper sales acts or practices. The bank must submit a comprehensive compliance plan to the CFPB that details the steps it intends to take to fulfill the order.

In their letter, the senators compared the misconduct at U.S. Bank with that at Wells Fargo, saying, “[T]his is the second time in less than a decade where the federal government has sought accountability and redress by a major bank for perpetuating this practice.”

Wells Fargo agreed to pay a $3 billion fine in 2020 regarding its misconduct, which involved the creation of thousands of fake accounts without customer consent. Wells Fargo also paid a $100 million fine to the CFPB in 2016. Another bank alleged by the CFPB to have opened unauthorized accounts is Fifth Third Bank, in a case that has not yet been settled.

The senators also laid out what they believe might be another line of inquiry: how U.S. Bank potentially misused customers’ personally identifiable information to create the fake accounts.

“Banks are entrusted with customers’ most sensitive information in support of applications for mortgages, loans, credit cards, deposit accounts, and financial services necessary to participate in the economy,” they wrote. “It is unacceptable that U.S. Bank provided incentives to and pressured its employees to take advantage of their unique access to a veritable treasure trove of sensitive, personal information to sign up unsuspecting customers for fee-generating financial products and services.”

The senators laid out a series of questions they would like U.S. Bank to answer by Sept. 6 and requested a representative of the bank appear before the committee. The senators would like U.S. Bank to inform them exactly how many fake accounts were opened, how customer personal data was used to open them, how U.S. Bank’s measurement of employee performance might have created incentives for the misconduct, whether any of the employees who participated in the scheme are still employed by the bank, what senior leadership knew about the fake accounts and what they did with that knowledge, and more.

U.S. Bank said through a spokesman the bank looks forward to responding to the letter.