Editor's note: CEO Tim Sloan sent the following companywide message on Aug. 22 to provide an update on progress in customer remediation efforts related to unacceptable sales practices that occurred in the Community Bank.
In my visits with team members across the country, I continue to admire the resilience demonstrated by each of you in a very challenging year and the care you show for our customers. At each stop, I’ve received a wide range of questions about the steps we’re taking to rebuild trust and build a better Wells Fargo. Many have been asking about our progress in making things right for customers who may have been harmed by unacceptable retail sales practices that occurred in our Community Bank. Today, I want to share with you my answers to those questions.
Q: How far along are we in our efforts to make things right for retail bank customers who may have had an unauthorized account opened in their name?
Thanks to the hard work of many of you, we’re closer to the completion of these efforts. You’ve succeeded at staying focused on the goal of making things right for our customers, and our progress has been significant.
Let’s review our progress in two key areas: identifying those who may have experienced financial harm, and remediating that harm.
In terms of identifying customers, over the past 10 months we have reached out directly to tens of millions of our consumer and small-business customers to let them know we want to address any concerns they have about impacts from unacceptable retail sales practices.
We also established a dedicated hotline — 877-924-8697 — and an online resource center for up-to-date information on this issue.
In addition to this direct outreach, we engaged a third party to conduct a detailed analysis of our current and former customers’ accounts to help identify potential harm. The final stage of that analysis is nearly complete.
The principle guiding our work to identify potential harm was to err on the side of our customers. This is important because the analysis is data-driven and looks at usage patterns in accounts. Since usage patterns of some authorized accounts opened with a customer’s consent can be similar to some unauthorized accounts, the analysis could not definitively determine if proper authorization occurred. That’s why we decided the analysis would identify potentially unauthorized accounts in order to err on the side of the customer.
These efforts, plus others, have resulted in customer refunds or payments to date exceeding $5 million. This reflects your responsiveness to our customers’ concerns, which has included an enhanced resolution process that expedites customer inquiries about unauthorized accounts. We also have offered mediation services to our customers at no cost to them.
Additionally, we reached a $142 million class-action settlement for our customers that covers concerns about retail sales practices and unauthorized accounts dating back to 2002. The settlement, which has received preliminary approval from the court, also will provide remediation to customers who experienced harm to their credit ratings. As a reminder, a timeline of our progress to date has been posted on Wells Fargo Stories.
Q: What’s left to do for Wells Fargo to complete this remediation process?
The next step will occur within a few weeks. That’s when we’ll announce the completion of the expanded retail account analysis, conducted by a third party, for 2009 through 2016. Again, this analysis examined account usage patterns and is constructed to err on the side of the customer in determining which accounts are included as potentially unauthorized.
Following completion of this review, fees or charges incurred on accounts that were identified as potentially unauthorized will be refunded. These customers will receive letters informing them that they are receiving either a refund check from Wells Fargo or a credit to their existing account.
Also, in the coming weeks, notices about the class-action settlement will be sent to current and former customers. The notices will provide information about the process for making claims, and customers who believe they should be included in this settlement will be able to submit claims under this broad and far-reaching settlement agreement. We’ve heard customers’ concerns about potential harm to credit scores due to unauthorized accounts, and that’s why an important part of this settlement is remediation to customers for increased borrowing costs due to credit score impact associated with a potentially unauthorized account.
Finally, we are working to compile a list of customers who complained that an account was opened without their consent, and those customers will be notified and automatically enrolled in a portion of the class-action settlement.
Our retail banking account analysis, the class-action settlement, broad customer outreach, and resolution of customer complaints are all very meaningful milestones and will help us fulfill our commitment to make things right for customers harmed by improper sales practices in our Community Bank.
Q: I have seen the phrase “potentially unauthorized” accounts. What does “potentially unauthorized” mean?
It’s important for everyone to understand this description, as it has been an ongoing source of confusion for our stakeholders, including team members.
“Potentially unauthorized” does not mean we are certain the account is unauthorized. The phrase “potentially unauthorized” is how we describe the total number of accounts that a third-party analysis identified as showing patterns that could indicate a lack of authorization — for instance, if a credit card wasn’t activated and used. From this number, we identify those accounts that incurred fees and other costs, and issue refunds and account credits to make things right for our customers.
Since our analysis was inclusive and erred on the side of the customer, this group most likely includes a population of accounts that were authorized. As I said before, we looked at patterns that sometimes, but not always, indicate a lack of authorization. However, we would rather be inclusive and refund the fees on accounts that were properly authorized than miss accounts that were not authorized.
Q: What do we mean by “err on the side of customers”?
It means that as we did our work to make things right for our customers, we took action in our customers’ favor, such as refunding fees even when the third-party data analysis could not definitively tell us whether an account was authorized by a customer or not.
While it is likely through the review process we will be refunding fees and charges on accounts that were properly authorized, it is the right thing to do. We have confidence that we’ve cast a wide net to reach customers who may have been harmed by potentially unauthorized accounts.
Let me share some examples:
- Credit cards were included in the potentially unauthorized population if not activated, even though it is not unusual for customers to obtain a credit card as a safety net. For example, most customers who received a credit card in the mail and didn’t call to activate the card are included in this group. In fact, unused or inactive cards that were later activated by our customers were included as potentially unauthorized in our original analysis.
- Checking and savings accounts that were considered potentially unauthorized included those that were opened with a minimum deposit, had a withdrawal of the same amount, and then had no further usage within certain timeframes. These accounts were included, even though it is not uncommon for many of our customers to open an account with a minimum deposit and later elect to withdraw funds or not use the account.
- Other credit accounts, such as credit lines, were included in our analysis based on several factors, including if they were not used, even though we know that people often obtain credit lines “just in case” and don’t use them.
Q: I saw that we believe the number of customers with potentially unauthorized accounts may increase significantly. Can you tell me more about why this number may grow?
Initially, our analysis focused on accounts that were opened during the time frame of May 2011 to mid-2015. Now we’re completing an expanded retail account analysis for 2009 through 2016, including additional analysis of the original review period. So, as our time frame almost doubles to an eight-year review period, we can expect our totals for accounts and dollars remediated to grow.
Again, in our effort to make things right, we want to reach every customer we can. Identifying potentially unauthorized accounts is one of the ways we accomplish that goal.
Q: Didn’t we already announce the expanded review of accounts and actions we’re taking? Why are we seeing news stories that suggest we’re conducting a new review of accounts?
You may get the impression from some news stories that the expanded time period for our account review was “new” news. That is not the case. While the final results will be new once received, we made the commitment to conduct this analysis more than 10 months ago. The strong public interest in this work is a reflection of the importance we all place on making things right for our customers. In the spirit of transparency, we are proactively communicating all of our rebuilding trust efforts with our stakeholders.
The results of our reviews will generate news headlines, but even as we face this renewed coverage, the best thing we can do is stay focused on fixing problems, making things right for customers, and building a better, stronger Wells Fargo.
Q: Does this complete our review of accounts?
While it does complete the review of accounts by the third party, our remediation efforts go much further.
Our outreach to tens of millions of customers has been an important part of our efforts, as is our class-action settlement which covers customer concerns dating back to 2002. Together, this combination of account analysis and remediation, customer outreach, the class-action settlement, and resolving customer complaints gives us confidence that we will ultimately take care of any customer who believes they were impacted by unacceptable retail sales practices.
We continue to encourage any customer to contact us if they believe they were harmed by improper sales practices, regardless of when it happened, so we can work with them to make it right.
Q: What have we done to ensure these sales practice issues don’t happen again?
We have made many changes in our retail bank branches and contact centers to help ensure these issues do not happen in the future:
- Eliminated product sales goals.
- Introduced new compensation and performance management programs that emphasize customer experience and risk management.
- Changed leadership in the Community Bank.
- Eliminated a layer of management in the Community Bank in order to bring senior management closer to our customers.
- Strengthened oversight and risk controls.
- Began the roll out of transformational changes to processes, coaching, and customer interaction to take customer experience to a new level.
Q: Once this additional review is complete, will we be finished with the sales practices issue and remediation?
We believe our analysis of accounts will be complete. We are going to spend the next several months issuing refunds and account credits to the customers we have just identified through our completed analysis and processing claims submitted in our class-action settlement. And even after that, we will always welcome any customer who comes to us with a concern.
Finally, the other work that will continue is making sure that all of our stakeholders — customers, investors, community and government leaders, regulators, and you, our team members — are informed of our efforts. This is an important part of our rebuilding trust commitment.
Q: What can you share about new issues that have emerged, such as those involving auto loan customers of Wells Fargo Dealer Services?
As we’ve said before, we’re reviewing all of our operations so we can be confident we have done all that we can do to build a better, stronger Wells Fargo.
Recent headlines about other customer issues at Wells Fargo reflect the results of that work — to identify and fix problems, and to be as transparent as possible in the process.
Q: What can team members do to help take care of customers?
First, encourage any customer who has concerns to call or visit us. And second, share the information I’m providing in this Team News to help the communities we serve understand all that we are doing to make things right for our customers.
While we have more to do, I’m confident our reviews have been thorough and we’re taking the steps necessary to transform our operations. What’s more, we are demonstrating that if customers encounter a challenge working with us today, we are taking action to address their concerns.
I look forward to reporting more progress in the months ahead.