For Immediate Release: Wednesday, November 23, 2016
Los Angeles City Council Passes Motion to Restrict Predatory Sales Practices at Big Banks
In the wake of the Wells Fargo consumer fraud scandal, Los Angeles bank workers and elected officials take steps to transform the future of city banking practices
LOS ANGELES – Los Angeles City Council passed a new motion that will further prohibit unscrupulous practices at the U.S.’s largest banks and restrict the use of predatory sales goals among banks vying for city contracts.
The motion, introduced by Councilmember Paul Koretz with the support of consumer advocates and bank workers, passed unanimously and directs the Office of Finance and the City Attorney to draft an amendment to the Responsible Banking Ordinance that enacts these reforms and adds whistleblower protections for frontline bank workers who report illegal practices to regulators.
In September, banking regulators and Los Angeles city attorney Mike Feuer announced a settlement with Wells Fargo over its illegal sales practices and California State Treasurer John Chiang suspended many of the state’s ties with the bank after banks workers and others exposed millions of unauthorized bank and credit card accounts.
This week, the city of Los Angeles is going a step further to address the pervasive problem of predatory sales goals by prohibiting the practice in all financial institutions and other companies that do business with the city. This ordinance is the first of its kind to address banks’ and harmful practices wholesale – Los Angeles is seeking to take steps to divest from any bank that uses these tactics.
“Predatory sales goals exist for one reason: to make big banks loads of money,” said Mona Bly who worked at Wells Fargo and is a member of the Committee for Better Banks. “Bank workers like me have had to choose between making high-pressure quotas so we could afford to buy groceries or push unnecessary products onto our customers. We can’t stand idle and just wait for another Wells Fargo. Los Angeles is taking an important step towards ensuring our banking industry learns its lesson for good.”
Over the past few years, bank workers across the country organizing with the Committee for Better Banks, the Alliance of Californians for Community Empowerment (ACCE), and the Communications Workers of America have put a spotlight on predatory incentive programs that force them to choose between consumers’ best interests and getting paid a living wage. In Los Angeles, Minneapolis and other cities, bank workers delivered petitions to bank managers from tens of thousands consumers and workers calling for an end to predatory sales goals.
This past summer, bank workers and consumer advocates in the Committee briefed members of Congress and representatives from the Consumer Protection Finance Bureau and the Office of the Comptroller of the Currency on the aggressive sales goals that are forcing bank workers to push unnecessary products on their customers.
Los Angeles is just one of many cities where underpaid bank tellers and managers are operating under hostile work conditions and threats of losing their jobs if they don’t sell these problematic products. A June 2016 report by the National Employment Law Project analyzed interviews with dozens of frontline bank workers who detailed predatory practices at Wells Fargo, Bank of America and other major banks. The report found that consumer complaints to the Consumer Financial Protection Bureau concerning retail banking increased 34 percent in the last year.