In a confidential report reviewed by the New York Times, the Office of the Comptroller of the Currency (OCC) expressed its disappointment towards Wells Fargo for deceptive practices in automotive insurance selling. Notably, customers of the third-largest bank in the US had unnecessary car insurance fees applied to their car loans despite the existence of sufficient coverage by other insurers.
An internal Wells Fargo report, leaked to NYT reporters in July, showed that hundreds of thousands of bank customers paid for unrequested or unnecessary insurance. To make matters worse, the excessive insurance fees pushed over 25,000 loans into collections and repossessions.
The bank’s auto loan unit, Wells Fargo Dealer Services, completely ignored signs of trouble with its product. While ignoring customer complaints, the lending team focused on sales volume and revenue generation. The OCC described the loan compliance measures as “weak” and expressed disappointment in the funding amount set aside for victims of the deceptive loan practices. Wells Fargo committed $80 million to its plan to pay victims for their troubles.
Over 570,000 customers of the troubled bank were affected by the poor lending practices at Wells Fargo. The public relations nightmare continued for the embattled financial institution, as many active duty military personnel had their vehicles repossessed without just cause.
It’s been a difficult year for the folks at Wells Fargo. Scandal after scandal have plagued the bank in 2017, and this latest round of trouble only adds to its bad reputation with US consumers. After the fake accounts scandal ousted the CEO last year, the embattled lender paid millions of dollars in regulatory fines and court settlements. Wells Fargo employees had been signing up its customers for credit card and bank accounts without the knowledge of their clients. With so many banking options, including credit cards, auto loans, and more, for consumer today, Wells Fargo can ill afford to offend its customers with yet another scandal in the headlines.
Wells Fargo consistently acts in bad faith with their customer and federal regulators, as seen in the whistleblower retaliations and tipping off their staff about incoming audits. A culture of “profits-first, customers-last” seems to be endemic within the ranks of Wells Fargo. In Los Angeles, four former Wells Fargo employees spoke out against the bank for its unethical mortgage practices, costing consumers millions of dollars in delays, extra interest, and penalties. Wells Fargo has a long way to go to rebuild their brand, and every scandal to hit the headlines makes it harder and harder to recover.
As the banking industry changes and new fintech startups smell blood in the water, it’s important for banks to operate with the highest possible ethical standards to retain customers and banking profits. Billions of dollars in fines and penalties are bad enough, but losing angry customers to competitors is a problem that will carry into 2018 and beyond.
However, in a recent statement, Wells Fargo spokeswoman Catherine Pulley offered hope to its remaining customers: “the bank [has] made significant changes in recent months to strengthen controls and improve complaints resolution.” It might not be enough to recover from a terrible year of scandals and negative press associated with the Wells Fargo brand.