It seems like barely a quarter goes by without Wells Fargo being exposed for some abusive practices, like opening millions of fake credit card accounts, or selling customers of its auto loans insurance that they didn't really need (but that the company insisted they did). In the latest violation, the New York Times reports that ...
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It seems like barely a quarter goes by without Wells Fargo being exposed for some abusive practices, like opening millions of fake credit card accounts, or selling customers of its auto loans insurance that they didn't really need (but that the company insisted they did).
In the latest violation, the New York Times reports that Wells Fargo continued to charge overdraft and other charges to customers even after closing their accounts for one of a myriad reasons.
The paper used Xavier Einaudi, a small business owner who banked with Wells, as its primary example. A few months back, the bank informed Einaudi that it would be closing all 13 of the checking accounts he had with the bank related to his roofing company, CRV Construction. When asked why it was closing the accounts, it replied that the issue was "confidential".
Anyway, Einaudi went to his local Wells branch and picked up a check compensating him for the contents of the accounts. One June 27, the bank said, the accounts would go defunct, and no more transactions would be allowed.
As it turns out, that wasn't exactly the case.
Shortly after the closure date, Einaudi realized that Wells had kept some of the accounts active with a zero balance. Meaning that some of Einaudi's payments to vendors like his insurer and his Google advertising accounts continued from the empty accounts. But this time, each transaction was accompanied by a $35 overdraft fee.
By the time Einaudi realized what was going on, he had wracked up thousands of dollars in overdraft fees.
Payments to his insurer, to Google for online advertising and to a provider of project management software were paid out of the empty accounts in July. Each time, the bank charged Mr. Einaudi a $35 overdraft fee
Mr. Einaudi called the bank’s customer service line. He went to his local branch. Nobody could help him. "They told me, 'The accounts are closed out - we cannot do anything.'"
This left Einaudi in an untenable position: The accounts were technically closed, but he was still being hit with overdraft fees that nobody at the bank could make stop. By the middle of July, he owed the bank nearly $1,500.
Fortunately for him, Einaudi wasn't alone with this problem.
As it turns out, Wells has failed to address these complaints from customers and employees, including one in the bank’s debt-collection department who grew concerned after being hit by an estimated $100,000 in overdraft fees over eight months. Customers say the bank should wipe these fees, since they were unfairly and arbitrarily charged on accounts that the bank had deliberately closed without its customers requests.
It's not clear, exactly, how many customers have been affected by this glitch. But many angry customers have filed complaints with the Consumer Financial Protection Bureau.
Robust discussions about the issue have continued on websites like Reddit and Quora, while some have expressed their misgivings with Wells.
"I don’t even know what happened," he said.
According to the NYT, Einaudi's problem stems from the way Wells' computer system processes closed accounts: Accounts that customers believe to be closed can, in fact, stay open for months past their closure date if there's a balance, even if the balance is negative (from fees charged by the bank).
And each time a transaction involving these accounts happens, the banks tacks on a fee.
Since the financial crisis, Wells has paid more than $15 billion in settlements to resolve investigations into its misdeeds, including the ones described above. With more of these scandals surfacing, who is going to step up and take the top job at Wells, particularly when you'd be liable to be blindsided by scandals like these, that hurt ordinary Americans.