Warren Questions Wells Fargo CEO Tim Sloan on Excessively High Fees the Bank Charged College Students
Recently Released CFPB Report Shows Wells Fargo Charged Students Three Times More than Competitors, Hitting Struggling Students Hard
Text of the Letter to Wells Fargo CEO Sloan (PDF) | Text of the Letters to College Presidents (PDF) | Text of the Report (PDF)
Washington, DC - United States Senator Elizabeth Warren (D-Mass.) sent a letter to Timothy J. Sloan, CEO and President of Wells Fargo & Company requesting more information about the exorbitant fees Wells Fargo charged students for financial products marketed to them through agreements with their colleges.
A report by the Consumer Financial Protection Bureau (CFPB) prepared in February of 2018, but only recently released through a Freedom of Information Act request, reveals that the fees charged to college students by Wells Fargo for debit cards and other financial products were more than three times higher than the average charges by other financial institutions. The CFPB examined bank fees at 573 colleges. The students at the 30 colleges with Wells Fargo products paid an average of $46.99 in fees annually, the highest of the banks examined, and more than three times higher than other banks.
"Wells Fargo has a history of aggressively and sometimes illegally squeezing its customers to boost its profits, and this report illustrates that the bank is deploying similar tactics on America's college campuses to target vulnerable students," Senator Warren wrote. "When granted the privilege of providing financial services to students through colleges, Wells Fargo used this access to charge struggling college students exorbitant fees. These high fees, which are an outlier within the industry, demonstrate conclusively that Wells Fargo does not belong on college campuses."
Based on an extensive analysis of nearly 600 marketing agreements between colleges and 14 financial institutions, including Wells Fargo, and an analysis of approximately 1.3 million student bank accounts opened under these agreements, CFPB found that a majority of students using sponsored accounts paid no fees at all. But Wells Fargo charged the highest fees. As a result, while Wells Fargo provided about one-quarter of the accounts, it collected more than half of all fees paid by college students using sponsored financial products.
"Worse still, the burden of Wells Fargo's fees does not hit all students equally," wrote Senator Warren. "Low-income students are more prone to overdraft on their accounts and to suffer from your bank's excessive overdraft fees."
The Senator also sent a letter to the presidents of 31 colleges where Wells Fargo provides financial services to students, making the colleges' leaders aware of the CFPB findings about Wells Fargo's excessive fees as they make future decisions about campus-sponsored financial products for their students.
To further understand the CFPB findings, Senator Warren has requested responses to questions regarding information about the high fees Wells Fargo charged college students, the demographic characteristics of the consumers of these accounts, evidence of the varying financial needs of their consumers, the partnerships with the 31 colleges, the marketing agreements with the 31 colleges, and a breakdown of the different types of fees. The Senator has requested responses by February 5th 2019.
Senator Warren has led the charge to hold Wells Fargo senior management accountable since the fake-accounts scandal came to light, as well as pressed to strengthen 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 her 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 urged for the removal of Wells Fargo board members amid new evidence that the bank failed to refund money owed to car loan customers, that it overcharged small businesses for credit card transactions, and that it billed certain mortgage customers for unexpected, optional services.
- On February 2, 2018, Chair Yellen announced in response to Senator Warren that the Fed would freeze the growth of Wells Fargo and push out four of the board members responsible.
- During a March 1, 2018 Senate Banking Committee hearing, Senator Warren urged Fed 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. Senator Warren followed up in April and again pressed Chair Powell to change course.
- In a response to Senator Warren on May 10, 2018, Chair Powell reconsidered and announced he would require a Fed Board vote on whether to lift Wells Fargo's growth restrictions. He also said he would consider releasing as much of the third-party review as possible.
- In December 2018, the Senator joined Senator Jack Reed (R-R.I.) and signed onto a letter to the Education Department regarding the enforcement of federal rules governing campus bank accounts.
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