October 13, 2022

Warren: Wells Fargo’s Fraud and Scams on Zelle Are Higher Than Other Banks and Increasing Rapidly, Renews Call for Missing Data

Wells Fargo customers report fraud and scams on bank’s Zelle platform at a rate that is nearly 2.5 times higher this year than it was in 2019; Rate of reported fraud and scams this year is more than twice as high for Wells customers than it is for customers of other banks

“Wells is failing to protect its customers from fraud and scams on the Zelle platform – and … the bank's failures are becoming even worse. You owe Congress and the public answers for these failures.”

Text of Letter (PDF)

Washington D.C. – Following the release of a report on fraud and scams on the money transfer platform, Zelle, U.S. Senator Elizabeth Warren (D-Mass.), a member of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to Wells Fargo CEO Charles Scharf based on new information indicating that Wells Fargo customers are reporting fraud and scams on Zelle at a rate that is nearly 2.5 times higher this year than that of 2019, and that the rate of reported fraud and scams this year is more than twice as high for Wells Fargo customers than it is for customers of other banks.

“This data indicates that Wells Fargo appears to have a significant problem with regard to preventing fraud and scams on Zelle. My concerns about this alarming pattern are exacerbated by Wells’ refusal to make public its Zelle scam and fraud data, and by your bank’s long history of ripping off its customers,” wrote Senator Warren.

Senator Warren’s staff analysis of the Wells data reveals two troubling findings about the rate at which customers are reporting that they are ripped off by fraud and scams on Zelle. Three other banks – PNC Bank, Bank of America, and US Bank – reported data on the percentage of Zelle transfers that resulted in fraud and scam claims by customers in 2022. For these three banks collectively, 0.03% of transactions – a total of over 135,000 claims – resulted in customers reporting fraud or scams. But for Wells Fargo, the rate at which its customers reported being ripped off by fraud and scams on Zelle was more than twice as high.

Senator Warren found that, even more troublingly, the percentage of Wells’ Zelle transactions that result in fraud and scam claims appears to be increasing rapidly: that rate is nearly 2.5 times higher this year than it was in 2019. The percentage of transactions that resulted in scam claims alone – in which Wells’ customers reported being fraudulently induced into making payments with their Zelle accounts – increased nearly six-fold. “The fact that Wells customers are now nearly 2.5 times more likely to be defrauded or scammed using Zelle than they were in 2019 is inexplicable,” continued the Senator.

Senator Warren also called out Wells Fargo for its failure to provide information on Zelle fraud and scams requested by members of Congress, and for its lack of transparency.  

“Wells Fargo did not cooperate with this investigation. Your bank failed to provide me with the information I requested in July 2022. Even… after you indicated to me in a hearing before the Senate Banking, Housing, and Urban Affairs Committee that you would provide me with information ‘immediately,’ your bank still withheld key information, refusing to provide data that would allow me to determine how often Wells has reimbursed its customers when they were defrauded on Zelle,” wrote Senator Warren.

The Senator asked Wells Fargo a series of questions about why the bank’s record of preventing fraud and scams on Zelle was worse than other comparable banks, about the extent of fraud and scams on its Zelle platform, and about how it reimburses customers who fall victim to these fraud and scams.  She also indicated that she would be providing the troubling data on fraud and scams on Wells’ Zelle platform to financial regulators.

In July 2022, Senator Warren joined her colleagues and wrote to seven of the nation’s largest banks regarding widespread fraud on Zelle. Senator Warren’s letter comes after months of attempting to obtain data from the big banks that own Zelle.

Senator Warren has long led the charge to hold Wells Fargo accountable for its fake-accounts scandal and long record of other misbehavior, and has fought for stronger consumer protections:

  • On March 17, 2022, Senator Warren and Senator Ron Wyden (D-Ore.), Chair of the Senate Finance Committee, sent a letter to Charles Scharf, CEO and President of Wells Fargo, calling for answers from the bank after a Bloomberg report found that in 2020, Wells Fargo was the only major lender in the United States to accept less than half of mortgage-refinancing applications from Black homeowners.
  • In February 2022, Senator Warren and Representative Katie Porter (D-Calif.) sent a letter to the Financial Industry Regulatory Authority (FINRA) questioning new reports of misbehavior by Wells Fargo that raise concerns about FINRA’s ability to fairly and effectively police the financial system after allegations arose that Wells Fargo, with the permission of FINRA, rigged the arbitration process by manipulating a list of arbitrators in a case in which the bank was alleged to have mishandled a customer’s investments.
  • On September 2021, Senator Warren called on Federal Reserve Chair Jerome Powell to use its existing authority to revoke Wells Fargo’s status as a financial holding company amid ongoing failure to meet regulatory requirements. 
  • In May 2021, Senator Warren called out the CEOs of four of the nation's largest banks — JPMorgan, Wells Fargo & Co, Citi, and Bank of America — for taking a collective $4 billion in overdraft fees from struggling consumers during the pandemic and called on them to immediately refund these fees. 
  • On September 30, 2020, Senator Warren wrote to Federal Reserve Chair Jerome Powell sharing new and previously unreleased information regarding recent reports that Wells Fargo placed non-delinquent mortgage borrowers into forbearance without their consent, potentially putting them at risk of greater financial hardship during the COVID-19 pandemic.
  • On September 5, 2019, Senator Warren called for answers from regulators about how Wells Fargo was able to charge overdraft fees after falsely telling customers their accounts were closed. 
  • On August 30, 2019, Senator Warren sent letters to then CFPB Director Kathy Kraninger, then Securities and Exchange Commission (SEC) Chairman Jay Clayton, and then 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.
  • On August 19, 2019, Senator Warren sent a letter to Wells Fargo requesting information about a 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.
  • On April 17, 2019, Senator Warren wrote to Joseph Otting, then 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.
  • On April 9, 2019, Senator Warren and Senate Banking Committee then-Ranking Member Sherrod Brown (D-Ohio) released 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 March 28, 2019, Tim Sloan announced that he was stepping down as Wells Fargo CEO.
  • On March 22, 2019, Senator Warren called on the OCC and the CFPB to fire then Wells Fargo CEO Tim Sloan and renewed her call for action by the Federal Reserve.
  • 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  related to violations of anti-money laundering laws.
  • On January 17, 2019, Senator Warren questioned Wells Fargo CEO Tim Sloan on excessively high fees Wells Fargo charged college students.
  • 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.
  • 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.
  • 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.
  • 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.
  • In July 28, 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.
  • At a Senate Banking Committee hearing on July 13, 2017, Senator Warren again called on Chair Yellen to remove implicated Wells Fargo board members.
  • 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.
  • 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.