Wells Fargo potentially collected “hundreds of millions of dollars” in fees from customers confused by the rules, Rep. Katie Porter (D-Calif.) said in a letter Thursday to the bank’s chief executive, Charles W. Scharf. Porter is a vocal member of the powerful Financial Services Committee.
The bank provided “incomplete information over a span of multiple years” even though it knew some customers were “confused” by its policies, Porter said in a letter to two of the bank’s regulators, the Office of the Comptroller of the Currency and the Federal Trade Commission. The confusion led some customers to unexpectedly trigger more fees by overdrawing their accounts, she said.
Wells Fargo disclosed the potential problem last month in a Securities and Exchange Commission filing but has not said how many customers may have been affected or how much it might end up refunding customers. The issue has also been reported in a story by the Capitol Forum.
The company said in its latest quarterly filing that it is "reviewing certain past disclosures to customers regarding the minimum qualifying debit card usage required for customers to receive a waiver of monthly service fees on certain consumer deposit accounts. "
“Based on the possibility of confusion by some customers regarding the transactions that counted toward the waiver, we expect to refund certain monthly service and related fees to affected customers,” the disclosure states.
“Separately, the Company expects to refund certain monthly service fees that were charged in the past on certain consumer deposit accounts prior to an initial deposit being made by the customer,” it states.
The bank has received Porter’s letter and will respond directly, said company spokeswoman Jennifer Dunn.
The Office of the Comptroller of the Currency declined to comment, and the Federal Trade Commission did not return an email seeking comment on Porter’s letter.
The scrutiny comes at a time when Wells Fargo is undergoing an overhaul. Scharf took over as chief executive last month, aiming to regain the trust of regulators, lawmakers and customers. The bank has already acknowledged mistakenly repossessing cars, foreclosing on homes and opening bank accounts customers didn’t want.
“I am hopeful that under your new leadership, the Bank will undergo the reputational transformation that you state is your number one priority," Porter said in her letter to Scharf. “Before Wells Fargo can in good faith begin any new initiatives or public relations campaigns related to its image restoration, it must take concrete action to address and resolve its many past mistakes.”
Wells Fargo, headquartered in San Francisco, has about 7,500 worldwide locations and claims to serve 1 in 3 U.S. households. The bank reported net income of $4.6 billion in the third quarter.
Bank fees have climbed in recent years, according to Bankrate. The average overdraft fee has risen from $21.57 in 1998 to $33.36 this year, according to the site. The cost of a savings account, or interest-bearing account, has risen from $9.29 to about $15.05 during that same time period, Bankrate found. And the cost of using an ATM not associated with your bank has been climbing more than 4 percent a year.
“Avoiding bank fees is becoming increasingly difficult,” said Brent Adams, a senior vice president of policy and communication at the Woodstock Institute, an advocacy group.
Many banks have several types of accounts with different rules described in densely written disclosure statements, he said. The fees are “disclosed in an email that has a bunch of other disclosures that few reasonable consumers would read,” Adams said. “And the fees have the effect of pushing more people out of the banking system.”