Corrected: Wells Fargo finds more unauthorized accounts, online billpay problems

(Corrects and reframes the first and third paragraphs to show the estimated number of accounts affected rather than the number of customers affected)

By Dan Freed

(Reuters) - Wells Fargo & Co hiked the tally of accounts that were potentially opened without customers' knowledge by 1.4 million on Thursday after an expanded review of improper sales practices.

The announcement is the latest in a drip feed of bad news about Wells Fargo, nearly a year after a sales scandal badly damaged the bank's reputation.

Wells will return $2.8 million to customers who appear to have had consumer and small business accounts opened without permission. It also uncovered about 528,000 potentially unauthorized online bill pay enrollments, a newly disclosed problem, and will return $910,000 to customers who were affected.

The scandal over phony accounts first erupted last September, when Wells Fargo reached a $190 million settlement with regulators over the matter. That led to the departure of a chief executive, a divisive shareholder meeting and disclosures of other sales practice problems ranging from unwanted auto insurance to improper mortgage fees.

The problems reported on Thursday came after a third party hired by Wells Fargo examined accounts stemming back to 2009, a broader timeframe than a review conducted last year. The bank previously disclosed the expanded review in a quarterly securities filing, but not its results.

The bank also faces multiple regulatory probes and private lawsuits, and some Democratic lawmakers have called on Republican leaders to summon bank leaders to appear before Congress to answer for the auto insurance problems.

A pending settlement for one private lawsuit led Wells to review accounts dating back to 2002, Chief Executive Tim Sloan said on a conference call with reporters.

"With the expanded analysis now complete, we will focus on remediation and making things right for our customers," he said.

The unauthorized online billpay fees were small, Sloan said, often $1. They resulted from branch employees setting up accounts in order to achieve product sales goals that have since been eliminated. The bank has refunded these amounts.

Wells Fargo shares fell slightly in morning trading, shedding 0.4 percent to $51.16.

The additional refunds amount to a tiny fraction of the bank's quarterly earnings, but investors who spoke to Reuters in recent weeks said they were less worried about the hard costs than a degradation of the bank's once-pristine brand.

They also expressed concern about Wells becoming an easy political target, going into the midterm elections.

Warren Buffett, who runs Wells Fargo's largest investor, Berkshire Hathaway Inc, said this week he still considers it a great bank despite selling some of his holdings. But he acknowledged the bank will likely find more problems now that it is shining a light in dark places.

"There's never just one cockroach in the kitchen," he said on CNBC.

(Reporting by Dan Freed in New York; Additional reporting by David Henry and Olivia Oran; Editing by Lauren Tara LaCapra and Bernadette Baum)