Wells Fargo expands remediation plans after additional analysis
Additional refunds will be issued to customers as the result of an expanded third-party review of retail banking activity, an ‘important milestone.’
Wells Fargo continues its efforts to scrutinize consumer and small-business retail banking activity in order to identify potentially unauthorized accounts and compensate customers who may have incurred fees as the result of past unacceptable sales practices. The work is part of its ongoing commitment to make things right with customers and restore trust.
On Aug. 31, the company released the results from an expanded third-party review that covered a nearly eight-year period — from January 2009 through September 2016 — and examined more than 165 million checking, savings, and unsecured credit card and line of credit accounts. Of those, 3.5 million accounts were identified as potentially unauthorized, with approximately 190,000 accounts having incurred fees. In September, Wells Fargo will issue a total of $2.8 million in refunds and credits due to customers on top of $3.3 million previously refunded.
In addition, the expanded analysis included a review of online bill pay services. Approximately 528,000 potentially unauthorized online bill pay enrollments were identified by the review and Wells Fargo will refund $910,000 to those customers who incurred fees or charges.
The company also announced that customers will be notified in September of their option to join a class-action legal settlement related to unauthorized accounts (Jabbari v. Wells Fargo, et. al.).
“We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank,” said CEO Tim Sloan. “To rebuild trust and to build a better Wells Fargo, our first priority is to make things right for our customers, and the completion of this expanded third-party analysis is an important milestone. Through this expanded review, as well as the class-action settlement, free mediation services, and ongoing outreach and complaint resolution, we’ve cast a wide net to reach customers and address their remaining concerns. Our commitment has never been stronger to build a better bank for our customers, team members, shareholders, and communities.”
Account analysis by a third-party consultant
The expanded review includes time periods not covered by an initial review completed last year. The latest review also applies updated and expanded data sources for time periods previously examined.
When determining which customers are due refunds, the company has worked to err on the side of customers. First, potentially unauthorized accounts are identified. As explained by Sloan in a message to Wells Fargo team members addressing frequently asked questions about sales practices remediation, “’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. 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.”
Next, accounts that were charged fees are identified. Finally, reimbursements are issued for any account identified in the review that was charged fees, even though a portion of these accounts were likely properly authorized.
“We know that the first step in rebuilding trust and building a better bank is to make it right with customers who may have incurred costs or harm as a result of improper retail banking sales practices that violated our customers’ trust, regardless of the timeframe,” said CEO Tim Sloan in a message to Wells Fargo team members last week.
Offering customers a class-action settlement option
Customers with complaints related to unauthorized accounts may also choose to join the $142 million Jabbari vs. Wells Fargo et. al. class-action legal settlement.
The settlement covers any person claiming that Wells Fargo opened, without their consent, a consumer or small-business checking or savings account or an unsecured credit card or line of credit, and customers who enrolled in certain identity theft protection services, between May 1, 2002 and April 20, 2017.
The settlement also covers customers with concerns about harm that could have been caused to their credit score by an account opened without their authorization. Customers with claims of an account they did not authorize that led to increased borrowing costs due to credit-score impact will be eligible for compensation.
Over the next two months, both Wells Fargo and a court-appointed claims administrator will notify current and former customers about how to join the class.
Wells Fargo is also compiling a list of customers who complained that an account was opened without their consent. Those customers will be notified by Wells Fargo and the settlement administrator and automatically enrolled in a portion of the class-action lawsuit.
In addition, Sloan said Wells Fargo will continue to offer free mediation services to customers who are not satisfied with any of the outcomes from the steps above. Wells Fargo has issued more than $3.7 million in refunds and credits to customers for complaints and mediation claims from September 2016 through July 2017.
Fixing problems and building a better bank
In addition to remediation efforts, Wells Fargo has taken a series of steps since September 2016 to strengthen its culture and operational controls and oversight. This included making changes in the highest levels of leadership, reclaiming pay from senior executives, and changing the way team members in branches and call centers are compensated.
A summary of the actions Wells Fargo has taken to date to make things right with affected customers and build a better bank for the future can be found in an interactive timeline on the company’s progress.
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