LOS ANGELES, June 9 (UPI) -- A city of Los Angeles lawsuit accusing Wells Fargo & Co. of opening bank accounts without customers' permission in order to reach sales quotas should be heard in federal court, the bank said.
Wells Fargo last week filed a motion requesting the case be transferred to the U.S. District Court for the Central District of California, Western Division, because it said the Los Angeles Superior Court doesn't have jurisdiction. The bank also "generally denies each and every allegation contained in the city's unverified complaint."
The lawsuit, filed in May, accuses Wells Fargo of encouraging bankers to engage in illegal sales tactics in order to meet "unreachable goals."
"As a result, Wells Fargo's employees have engaged in unfair, unlawful and fraudulent conduct, including opening customer accounts and issuing credit cards without authorization," the lawsuit, filed by Los Angeles city attorney Michael Feuer, said.
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The bank is also accused of opening customer accounts and adding unwanted secondary accounts, both of which generate fees, without permission.
By doing so, Wells Fargo has "caused significant stress to, and hardship and financial losses for, its customers" by withdrawing money from authorized accounts to pay for fees on unauthorized accounts, the lawsuit said. Customers were also placed into collections and received negative marks on credit reports when those unauthorized fees went unpaid.
The lawsuit points to a brochure encouraging employees to make sure customers on average have eight open accounts with Wells Fargo as part of its "Going for gr-eight" campaign.
Wells Fargo filed a motion Thursday seeking to have the case moved to federal court, saying banks fall under federal regulations and are thus not subject to California's unfair competition laws. The company cites the 1919 Edge Act, an amendment to the U.S. Federal Reserve Act of 1913, which gives federal jurisdiction over civil suits involving transactions involving international banking.
If Wells Fargo is found to have violated California's unfair competition laws, the bank could be fined up to $2,500 for each violation plus restitution to customers. The lawsuit doesn't clarify how many customers have allegedly been affected by these practices.
