Wells Fargo & Company (NYSE: WFC) today announced the completion of its
previously announced expanded third-party review of retail banking
accounts dating back to the beginning of 2009. Combined with a recent
class action settlement and ongoing broad customer outreach and
complaint resolution, the completion of the analysis further paves the
way for making things right for Wells Fargo customers who may have been
harmed by unacceptable retail sales practices.
“We apologize to everyone who was harmed by unacceptable sales practices
that occurred in our retail bank,” said Wells Fargo 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.”
Erring on the Side of Customers
To conduct the review of retail bank accounts, Wells Fargo engaged a
third-party firm that developed a data analysis methodology that errs on
the side of customers. The account review analyzed consumer and small
business checking, savings, and unsecured credit card and line of credit
account data to identify potentially unauthorized accounts (see Aug.
22 news release for details on the methodology). The analysis was
data-driven and looked at account usage patterns. Since usage patterns
of some authorized accounts opened with a customer’s consent can be
similar to some unauthorized accounts, it is likely that some properly
authorized accounts were included in the population identified as
unauthorized accounts.
Results of Expanded Data Analysis
The original account analysis reviewed 93.5 million current and former
customer accounts opened in an approximately four and half year time
period – from May 2011 through mid-2015 – and identified approximately
2.1 million potentially unauthorized accounts. The expanded analysis
reviewed more than 165 million retail banking accounts opened over a
nearly eight-year period – from January 2009 through September 2016 –
and identified a new total of approximately 3.5 million potentially
unauthorized consumer and small business accounts. The 3.5 million
potentially unauthorized accounts total is composed of the following:
-
The original time period, which included refinements to the practices
and methodologies previously used by the third-party to determine
potentially unauthorized accounts: 2.55 million accounts identified as
potentially unauthorized; and
-
The additional periods back to January 2009 and forward to September
2016: 981,000 accounts identified as potentially unauthorized.
In connection with these 3.5 million potentially unauthorized accounts,
approximately 190,000 accounts incurred fees and charges, up from
130,000 previously identified accounts that incurred fees and charges,
and Wells Fargo will provide a total of $2.8 million in additional
refunds and credits on top of the $3.3 million previously refunded as a
result of the original account review.
Online Bill Pay Review
In addition, the expanded analysis included a review of online bill pay
services, as required by the Sept. 8, 2016, consent orders. During the
almost eight-year review period, the analysis identified approximately
528,000 potentially unauthorized online bill pay enrollments and Wells
Fargo will refund $910,000 to customers who incurred fees or charges.
The analysis identified, as potentially unauthorized, accounts with only
one minimal payment and no further use of the service. Some customers
may have made an authorized introductory payment and then elected not to
use the service. Therefore, the analysis did not definitively identify
whether an enrollment was authorized by a customer or not, and properly
authorized enrollments are likely part of this total. Wells Fargo will
issue refunds for all enrollments the review identified as potentially
unauthorized.
Customer Remediation Update
In addition to the refunds resulting from the third-party account
review, Wells Fargo has provided more than $3.7 million in refunds and
credits to customers for complaints and mediation claims from Sept. 8,
2016, through July 31, 2017. Customers also may receive compensation
under the recent $142 million class-action settlement for claims dating
back to 2002. After plaintiffs’ attorneys’ fees and costs of
administration, the class-action settlement will provide reimbursement
of fees not already paid and compensation for increased borrowing costs
due to credit-score impact associated with a potentially unauthorized
account. Remaining funds will be distributed to the participants in the
class on a per account basis.
Following is a summary of Wells Fargo’s remediation actions:
Summary of Customer Remediation Actions (paid or identified
to date)
|
|
|
|
Third-party account review (January 2009 – September 2016)
|
|
$7.0 million in refunds of fees and interest (paid or to be paid)
|
Wells Fargo customer outreach – complaints
process/mediation (Sept. 8, 2016 – July 31, 2017)
|
|
$3.7 million in compensation paid (through July 2017)
|
Class-action settlement (May 1, 2002 – April 20, 2017)
|
|
$142 million for customer remediation and settlement expenses
|
|
|
|
“We want to ensure we make things right for each and every customer who
may have concerns about the impact of unacceptable sales practices,”
said Mary Mack, head of Community Banking. “Over the past year, we have
made numerous improvements in our retail bank, such as eliminating
product sales goals for retail bankers in bank branches and call centers
and increasing oversight and controls – changes that give us confidence
that our team members are focused on delivering exceptional service and
advice to our customers.”
Next Steps: Making Things Right for our Customers
In the coming weeks, Wells Fargo will be taking significant steps to
compensate its retail and small business customers who may have been
harmed or impacted by unacceptable retail sales practices within the
company’s retail bank. As Wells Fargo makes things right with customers,
these steps also will help the company fulfill its remediation
commitments under the sales practices consent orders with the Consumer
Financial Protection Bureau and the Office of the Comptroller of the
Currency.
These steps include:
-
Beginning communications associated with the company’s $142 million
class action settlement agreement (
Jabbari
v. Wells Fargo) covering all persons who claim 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. Over the
next two months, both Wells Fargo and the court-appointed claims
administrator will be sending communications about how to join the
class to current and former Wells Fargo customers (details are
available online at WFSettlement.com).
-
Continuing to work with any customers who contact us with concerns
about harm that could have been caused to their credit score by an
account opened without their authorization and correcting records for
these customers with the credit bureaus. Customers who inform us of an
account they did not authorize that led to increased borrowing costs
due to credit-score impact will be eligible for compensation from the
class action settlement (Jabbari v. Wells Fargo, detailed
above).
-
Compiling a list of customers who complained to Wells Fargo about an
unauthorized account that was opened without their consent. Those
customers will be notified by both Wells Fargo and the court-appointed
claims administrator and automatically enrolled in a portion of the
class-action settlement.
-
Continuing to offer free mediation services to customers if the
company is unable to resolve an issue related to an unauthorized
account directly with the customer. Wells Fargo will continue to offer
this service to customers who are not satisfied with any of the
outcomes from the steps above.
“As always, we welcome – and encourage – customers with questions or
concerns to visit a branch or call our contact center,” said Sloan.
“There is nothing more important to me and to Wells Fargo than
rebuilding trust with our customers and helping them succeed
financially. We are working hard to ensure this never happens again and
to build a better bank for the future.”
For customers who believe they had an unauthorized account or service
opened in their name, regardless of when the issue occurred, Wells Fargo
has a dedicated hotline: 1-877-924-8697.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based
financial services company with $1.9 trillion in assets. Wells Fargo’s
vision is to satisfy our customers’ financial needs and help them
succeed financially. Founded in 1852 and headquartered in San Francisco,
Wells Fargo provides banking, insurance, investments, mortgage, and
consumer and commercial finance through more than 8,500 locations,
13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has
offices in 42 countries and territories to support customers who conduct
business in the global economy. With approximately 271,000 team members,
Wells Fargo serves one in three households in the United States. Wells
Fargo & Company was ranked No. 25 on Fortune’s 2017 rankings of
America’s largest corporations. News, insights and perspectives from
Wells Fargo are also available at Wells
Fargo Stories.
Cautionary Statement About Forward-Looking Statements
This news release contains forward-looking statements about our future
financial performance and business. Because forward-looking statements
are based on our current expectations and assumptions regarding the
future, they are subject to inherent risks and uncertainties. Do not
unduly rely on forward-looking statements as actual results could differ
materially from expectations. Forward-looking statements speak only as
of the date made, and we do not undertake to update them to reflect
changes or events that occur after that date. For information about
factors that could cause actual results to differ materially from our
expectations, refer to our reports filed with the Securities and
Exchange Commission, including the discussion under “Risk Factors” in
our Annual Report on Form 10-K for the year ended December 31, 2016, as
filed with the Securities and Exchange Commission and available on its
website at www.sec.gov.