Wells Fargo found another way to abuse customers. Then I called them on it
In recent years we’ve seen Wells sign up millions of people for accounts they didn’t want, improperly repossess the cars of service members and charge customers for insurance they didn’t ask for, resulting in billions of dollars in fines.
Now there’s this.
Rick Yelinek, 68, finally amassed enough money to pay off the mortgage on his Los Angeles home. He stopped by a Wells Fargo branch in Glendale, California, with a cashier’s check and deposited it into the checking account used for his Wells Fargo home loan.
First Yelinek was told he’d have to wait a few days for the check to clear, which he was expecting, even though it meant Wells would be able to add more interest to his loan, which it did.
After the check cleared, though, is when the bank lived up to its reputation for customer unfriendliness.
Yelinek was informed that he’d have to shell out an extra $30 for a wire transfer to move his mortgage payment from one division of the bank to another.
“I was incredulous,” he told me. “I couldn’t believe what they were saying.”
Yelinek pointed out to the Wells staffer handling his account that he’d been a customer in good standing for many years and asked that the $30 fee be waived.
“They said they never waive wire transfer fees,” he recalled.
Yelinek subsequently lodged a complaint with the bank over his treatment. That was in August. “I’m still waiting for a response,” he said this week.
The episode is remarkable on numerous levels, not least that if any bank needs to do some reputational damage control by treating people fairly, it’s Wells Fargo.
Then there’s this: Yelinek is a 35-year veteran of the banking industry, including seven years at Wells Fargo as a loan officer. It’s fair to say he knows the business.
And he’s unimpressed by his former employer’s behavior.
“This is typical Wells Fargo,” Yelinek said. “The bank is so feebased, they’ll do anything to get money from customers.”
Wells may be particularly focused on fees, but it’s by no means alone.
Since deregulation in the 1980s, the entire banking industry has grown more reliant on reaching into people’s pockets with nickeland-dime fees, as opposed to its traditional focus on loan interest.
We’re talking overdraft fees, wire transfer fees, credit card fees, insufficient funds fees, ATM fees and other charges that over the years have played an increasingly important role in keeping profithungry bank shareholders happy.
The Federal Reserve Bank of Cleveland found in a 2019 study that banks’ so-called noninterest income jumped by 25% from 2005 to 2018.
The banking industry as a whole took in $12.4 billion from overdraft fees alone last year, the vast majority of which were paid by lower-income people.
So Wells Fargo isn’t the only one muscling its customers. But its status as the country’s largest residential mortgage servicer gives it ample opportunity to exploit this captive market.
In the nine months that ended Sept. 30, Wells pocketed almost $4 billion in mortgage banking non-interest income, including $2.1 billion in “servicing fees, late charges and ancillary fees.”
This presumably includes those $30 wire transfer charges that infuriated Yelinek.
Wells is currently servicing about 6.5 million mortgage loans.
“I wonder how many $30 fees they get for payoffs of those mortgages,” Yelinek said, echoing my own thoughts.
And that’s the key issue in any discussion of fee-based businesses. The outrage isn’t just in individual fees, although they’re sufficiently galling to most consumers.