The long road back continues for Wells Fargo. It now appears the company may have created over 3.5 million accounts without customer knowledge, that is another 1.4 million than initially estimated. The new numbers come from the outside consultant Wells Fargo hired to review their practices and look for additional problems the company might need to address. Here is part of the statement Wells Fargo made with the release of the third-party investigation:
“We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank,” said Wells Fargo CEO Tim Sloan. “To rebuild trust and to build a better Wells Fargo, our first priority is to make things right for our customers, and the completion of this expanded third-party analysis is an important milestone. Through this expanded review, as well as the class action settlement, free mediation services, and ongoing outreach and complaint resolution, we’ve cast a wide net to reach customers and address their remaining concerns. Our commitment has never been stronger to build a better bank for our customers, team members, shareholders and communities.”
It is important that Wells Fargo did highlight there was a third-party review:
“To conduct the review of retail bank accounts, Wells Fargo engaged a third-party firm that developed a data analysis methodology that errs on the side of customers. The account review analyzed consumer and small business checking, savings, and unsecured credit card and line of credit account data to identify potentially unauthorized accounts (see Aug. 22 news release for details on the methodology). The analysis was data-driven and looked at account usage patterns. Since usage patterns of some authorized accounts opened with a customer’s consent can be similar to some unauthorized accounts, it is likely that some properly authorized accounts were included in the population identified as unauthorized accounts.”
It is not enough to engage in corrective action, stakeholders need to be able to believe in that corrective action. Wells Fargo must sell the process they are using to fix the problem and not just the fixes they have identified which include the following:
|Summary of Customer Remediation Actions (paid or identified to date)|
|Third-party account review (January 2009 – September 2016)||$7.0 million in refunds of fees and interest (paid or to be paid)|
|Wells Fargo customer outreach – complaints process/mediation (Sept. 8, 2016 – July 31, 2017)||$3.7 million in compensation paid (through July 2017)|
|Class-action settlement (May 1, 2002 – April 20, 2017)||$142 million for customer remediation and settlement expenses|
Next Steps: Making Things Right for our Customers
In the coming weeks, Wells Fargo will be taking significant steps to compensate its retail and small business customers who may have been harmed or impacted by unacceptable retail sales practices within the company’s retail bank. As Wells Fargo makes things right with customers, these steps also will help the company fulfill its remediation commitments under the sales practices consent orders with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency.
These steps include:
- Beginning communications associated with the company’s $142 million class action settlement agreement ( Jabbari v. Wells Fargo) covering all persons who claim that Wells Fargo opened, without their consent, a consumer or small business checking or savings account or an unsecured credit card or line of credit, and customers who enrolled in certain identity theft protection services, between May 1, 2002 and April 20, 2017. Over the next two months, both Wells Fargo and the court-appointed claims administrator will be sending communications about how to join the class to current and former Wells Fargo customers (details are available online at WFSettlement.com).
- Continuing to work with any customers who contact us with concerns about harm that could have been caused to their credit score by an account opened without their authorization and correcting records for these customers with the credit bureaus. Customers who inform us of an account they did not authorize that led to increased borrowing costs due to credit-score impact will be eligible for compensation from the class action settlement (Jabbari v. Wells Fargo, detailed above).
- Compiling a list of customers who complained to Wells Fargo about an unauthorized account that was opened without their consent. Those customers will be notified by both Wells Fargo and the court-appointed claims administrator and automatically enrolled in a portion of the class-action settlement.
- Continuing to offer free mediation services to customers if the company is unable to resolve an issue related to an unauthorized account directly with the customer. Wells Fargo will continue to offer this service to customers who are not satisfied with any of the outcomes from the steps above.
Questions to Consider
- Why does Wells Fargo need to sell the process and not just the corrective actions?
- How useful do you think the continued apologies are as part of the crisis response? What is the rationale for your conclusion?
- If you were a customer, how would you feel about the corrective action? Would you feel these are enough? Why or why not?