For customers of Wells Fargo, recent months have been a series of red flags showing that the bank has not always acted in their best interests. The bank has broken many major laws and violated customers’ rights, found the Consumer Financial Protection Bureau (CFPB).
Borrowers with Wells Fargo student loans might wonder if the bank’s shady activities have affected them. Here’s what you need to know if you have a Wells Fargo student loan.
CFPB fined Wells Fargo for illegal student loan practices
An early sign of trouble for Wells Fargo student loans was an August 22 press release from the CFPB. According to the statement, Wells Fargo had engaged in “illegal private student loan servicing practices that increased costs and unfairly penalized certain student loan borrowers.”
The practices included illegally charging late fees. It charged customers that paid on the last day of their grace period, as well as customers who paid in several smaller installments.
Some borrowers also got hit with fees due to how Wells Fargo processes payments.
Say, for instance, a borrower with multiple Wells Fargo student loans made a payment that was not enough to cover the total amount due that month. In some cases, the bank divvied up such payments across loans “in a way that maximized late fees rather than satisfying payments for some of the loans,” according to the CFPB report.
Wells Fargo also provided misleading information about partial payments, and it failed to correct credit reporting errors for some borrowers who made partial payments or overpayments.
The CFPB ordered Wells Fargo to pay at least $410,000 to compensate consumers who received these illegal late fees on their student loans. Wells Fargo will also face a $3.6 million fine from the CFPB, and was ordered to wipe credit reporting errors and fix its student loan servicing to comply with regulations that protect borrowers.
Wells Fargo employees created 2 million dummy accounts
Just a few weeks later in a September 8 statement, the CFPB reported that Wells Fargo employees created more than two million unauthorized deposit and credit card accounts.
Using personal information, Wells Fargo employees opened fake accounts under consumers’ names and transferred funds from an existing, valid account without the consumers’ knowledge or authorization. Moving funds around in this way often incurred late fees on both the existing and dummy accounts.
“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” said CFPB Director Richard Cordray.
Wells Fargo employee pay was tied to performance metrics like customers signing up for new accounts and credit cards. This incentivized these deceitful practices, which date back at least five years, according to the CFPB.
The CFPB levied a record $100 million fine against Wells Fargo for these illegal practices. The bank is also required to identify and alert affected customers and repay incurred fines or interest, which are projected to be over $2.5 million. Lastly, Wells Fargo must hire an independent consultant to review and improve its sale process.
3 things Wells Fargo customers should do
Customers of Wells Fargo affected by these illegal practices will be refunded. The bank must identify affected customers and return funds, with no action required by customers.
Some reimbursements have already been sent, according to the CFPB. However, it’s an ongoing process and payments will be made through the coming months.
If you’d rather not wait or are worried about your Wells Fargo student loan or other accounts, however, there are some actions you can take.
1. Regularly review account statements
The CFPB advises customers of Wells Fargo and all banks and credit unions to closely monitor their account statements.
In particular, watch for any unauthorized activity like transfers, withdrawals, or fees. You should also watch for unauthorized products, such as newly opened credit cards, bank accounts, or even debit cards.
2. Check your credit report
This is also a good excuse to review your credit report, which can be requested for free at AnnualCreditReport.com. Here, you can verify that there are no unauthorized credit card accounts under your name.
If you have Wells Fargo student loans, check your credit report for errors that could be a negative mark on your history.
3. Consider switching banks or refinancing Wells Fargo student loans
The trouble with Wells Fargo might also be a reason to consider choosing a new bank. With a little research, you can likely find a bank or credit union that can beat Wells Fargo’s account fees and deposit rates.
If you have a student loan with Wells Fargo, ending that relationship might be a little more involved than closing a deposit account. Look into refinancing student loans with a new servicer. You might even be able to get a lower interest rate or more favorable repayment term.
Interested in refinancing student loans?Here are the top 6 lenders of 2017!
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