Senator Warren Demands Answers from Regulators About How Wells Fargo Was Able to Charge Overdraft Fees After Falsely Telling Customers Their Accounts Were Closed
Latest Revelations Suggest That Wells Fargo Is Not Complying with Consumer Protection and Securities Law or Its Obligations Under Settlements with Regulators
Warren Also Releases Wells Fargo Response to August 20th Letter Inquiring About NYT Report
Washington, DC – United States Senator Elizabeth Warren (D-Mass.) last week sent letters to Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger, Chairman of the Securities and Exchange Commission (SEC) Jay Clayton, and Comptroller of the Currency Joseph Otting, expressing concern that Wells Fargo executives may have once again intentionally misled investors—this time about the strength of their customer base. A recent New York Times report suggested that Wells Fargo keeps accounts active for months after informing customers that they had been closed and, in some cases, charges customers thousands in overdraft fees when charges hit the still-open accounts. Senator Warren also released Wells Fargo’s response to a letter she sent on August 20th, in which interim Wells Fargo CEO Allan Parker confirmed that Wells Fargo is working with regulators to conduct a review of the activities described in the New York Times article.
According to the New York Times, Wells Fargo routinely keeps open accounts that customers have been told are closed, causing the account to accrue overdraft fees anytime an additional charge -- even a fraudulent charge -- hits the account. While the full scope and magnitude of this problem are not yet clear, one customer reportedly reported that he was charged almost $1,500 in fees on his "closed" account and a single company whistleblower apparently took in approximately $100,000 in overdraft fees in just eight months. According to the report, affected customers usually learn what happened only after their overdrawn accounts are sent to Wells Fargo's collections department and reported to a national database of delinquent bank customers, which often means a customer cannot open a new bank account anywhere. Customers who attempted to mitigate the problem with Wells Fargo employees were told "[t]he accounts are closed out—we cannot do anything.”
Senator Warren argued that the latest scams raise significant doubts about the three regulators’ abilities to prevent Wells Fargo from cheating its customers and requested that they provide her with more information about their oversight activities.
“This latest revelation -- that nearly three years after the [Office of Comptroller of Currency], along with the [CFPB], took action against Wells Fargo for opening millions of fake accounts, the bank is once again profiting off of accounts that its customers do not know that they hold -- suggests not only that deep structural problems remain at the bank, but also that its regulators have not figured out how to keep Wells Fargo customers from being cheated.” Senator Warren wrote to Comptroller Otting.
The New York Times report revealed that Wells Fargo makes false representations to customers about when their accounts would be closed, charging overdraft fees for subsequent withdrawals and then reporting this information to credit reporting agencies. Senator Warren asked the CFPB to investigate whether these actions violated the Dodd-Frank Act’s ban on unfair, deceptive, and abusive acts or practices or the Fair Credit Reporting Act. She also asked both Director Kraninger and Comptroller Otting if these actions violated the terms of their agencies’ settlements with the bank.
In its efforts to shore up investors concerned with its incessant string of scandals, Wells Fargo executives have repeatedly trumpeted rising numbers of checking accounts. Senator Warren requested that the SEC investigate whether Wells Fargo leaders have violated securities laws by reporting false metrics to investors that include accounts that had already been closed.
Senator Warren has led the charge to hold Wells Fargo senior management accountable since the fake-accounts scandal from 2011 to 2015 came to light, and has fought for stronger consumer protections:
- On September 20, 2016, Senator Warren called on former Wells Fargo CEO and Chairman John Stumpf to resign for his role in the fake accounts scandal. Mr. Stumpf resigned on October 12, 2016.
- On June 19, 2017, Senator Warren sent a letter to then-Fed Chair Janet Yellen urging the Federal Reserve to remove 12 Wells Fargo board members following the fake accounts scandal.
- At a Senate Banking Committee hearing on July 13, 2017, Senator Warren again called on Chair Yellen to remove implicated Wells Fargo board members.
- Later in July 2017, Senator Warren renewed her call for the Fed to remove Wells Fargo board members after it was reported that more than 800,000 Wells Fargo customers were charged for auto insurance they did not need.
- On August 16, 2017, Senator Warren again called for the removal of Wells Fargo board members amid new evidence that the bank failed to refund money owed to car loan customers, overcharged small businesses for credit card transactions, and billed certain mortgage customers for unexpected, optional services.
- On February 2, 2018, Chair Yellen announced in response to Senator Warren that the Federal Reserve would freeze the growth of Wells Fargo and push out four of the board members responsible.
- In March and April 2018, Senator Warren urged Federal Reserve Chair Jerome Powell to hold a public vote by the Federal Reserve Board on lifting growth restrictions for Wells Fargo instead of delegating it to staff. She also asked for the public release of the third-party review of how Wells Fargo is implementing reforms.
- In a response to Senator Warren on May 10, 2018, Chair Powell reconsidered and announced he would require a Federal Reserve Board vote on whether to lift Wells Fargo's growth restrictions and said he would consider releasing as much of the third-party review as possible.
- On January 17, 2019, Senator Warren questioned Tim Sloan on excessively high fees Wells Fargo charged college students.
- On April 4, 2019, Wells Fargo announced it had eliminated some of these fees associated with campus debit cards.
- On February 22, 2019, Senator Warren once again urged Chair Powell not to lift growth cap restrictions on Wells Fargo until Tim Sloan is removed from his role as CEO, citing a report revealing that, beginning in 2016, Wells Fargo employees "routinely falsified clients' signatures and otherwise doctored paperwork" in order to comply with a legal settlement with the Office of the Comptroller of the Currency (OCC) related to violations of anti-money laundering laws.
- On March 22, 2019, Senator Warren called on the OCC and CFPB to fire Wells Fargo CEO Tim Sloan and renewed her call for action by the Federal Reserve.
- On March 28, 2019, Tim Sloan announced that he was stepping down as Wells Fargo CEO.
- On April 9, 2019, Senator Warren and Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) released new letters from the Fed, the OCC, and CFPB in response to inquiries that they sent the regulators in March 2019. The regulators told the senators that Wells Fargo has not satisfied its obligations under existing consent orders, which require the bank to remediate customers harmed by its wrongdoing and impose reforms to end Wells Fargo's unlawful activity.
- On April 17, 2019, Senator Warren wrote to Joseph Otting, Comptroller of the Currency, requesting information about the role that the OCC will play in the selection of a new CEO and President of Wells Fargo.
- In response to Senator Warren’s letter, Comptroller Otting confirmed that the OCC would exercise its statutory authority to review the selection of a new CEO of Wells Fargo.
- On August 20, Senator Warren sent a letter to Wells Fargo & Company requesting information about a new report that the bank kept accounts active for months after they had been closed by customers and charged customers hundreds or even thousands of dollars in overdraft fees for charges made against these “closed” accounts.
- Senator Warren is releasing interim Wells Fargo CEO Allan Parker’s response for the first time today.
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