Two words that make consumer expert Clark Howard’s skin crawl! And no “giant monster mega-bank” — as Clark calls them — was more revolting in 2017 than Wells Fargo.
Here’s a look back at the newer ways that the big bank ripped off its customers — beyond the usual high fees, poor customer service and puny interest rates on your savings.
Pain in the wallet: Wells Fargo’s 2017 track record of transgression
1. Forced collision coverage for auto loan customers
In July 2017, Wells Fargo admitted that it required auto loan customers to maintain collateral-protection insurance even if they had their own vehicle insurance.
The bank agreed to refund $80 million for nearly 600,000 customers who financed their car purchases through Wells Fargo.
2. Wrongful fees for mortgage lock extensions
In October 2017, the giant monster mega-bank fessed up to charging up to $98 million in wrongful fees to 110,000 customers who wanted to extend the interest-rate commitments they had from Wells Fargo.
Perhaps worst of all, it was the bank dragging its feet during the underwriting process that often created the delays that made these mortgage lock extensions necessary — but it was customers who were forced to foot the bill!
3. Illegal modification of mortgage loan terms for customers in bankruptcy
On the face of it, you’d think Wells Fargo did a good thing with this one.
The bank lowered the monthly payments for some mortgage borrowers who were in bankruptcy. Sounds great, right?
But here’s the catch: In doing so, Wells Fargo extended the terms of borrowers’ loans by decades. That effectively puts those borrowers on the hook for monthly payments for a much longer horizon — which means more interest that the bank can collect.
Extending the mortgage loan terms for customers in bankruptcy is something that requires court approval, which Wells Fargo did not get.
Now Wells Fargo has been named as the defendant in a new class-action lawsuit.
4. The phantom account scandal — revisited
Who could forget the massive scandal of 2016 when Wells Fargo admitted to opening millions of unauthorized accounts for customers in order to meet aggressive sales goals?
Well, 2017 saw a reboot of this controversy when the bank uncovered an additional 1.4 million accounts it opened in customers’ names without their knowledge or approval.
5. Wells Fargo has a beef with the King
This one isn’t technically about retail banking customers, but this flame-broiled beef is just too tasty to pass up!
Restaurant Brands International (RBI) alleges that certain members of Wells Fargo’s investment banking arm did some shady machinations that made the restaurant group take a six-figure loss on a certain trade.
You probably know RBI as the parent company of Burger King, Tim Hortons and Popeyes Louisiana Kitchen.
At the heart of RBI’s beef with Wells Fargo is a suspect practice called front-running. You can think of it as the equivalent of insider trading when it comes to foreign-currency exchange.
“Front-running typically involves a trader jumping ahead of a client’s order, buying or selling for their own account to profit when the larger transaction moves a price,” the Wall Street Journal reports.
In October 2017, the bank’s investment arm was subpoenaed by federal regulators over this issue. The outcome of the case is still pending.
Why overdraft “protection” is a ripoff
[anvplayer video=”4206127″ station=”998267″]