Banking Issues and Trends

Bowing to customer pressure, Wells Fargo is reversing a policy it announced just over a month ago that it would close customers’ personal lines of credit and not issue new ones.

Late Wednesday, the bank said it won’t open new credit lines but that customers with existing personal credit line accounts may keep them open. A Wells Fargo spokeswoman told CNBC that it would maintain active accounts and reopen closed accounts for customers who request it.

In July, the bank sent a six-page letter to customers who have one of the accounts, explaining its decision to eliminate that loan product so it can focus on the growing demand for its credit cards and personal loans.

The letter acknowledged that consumers’ credit scores could dip once the account is closed. That drew a sharp response from a frequent Wells Fargo critic, Sen. Elizabeth Warren (D-Mass.).

“Not a single @WellsFargo customer should see their credit score suffer just because their bank is restructuring after years of scams and incompetence,” Warren posted on Twitter last month. “Sending out a warning notice simply isn’t good enough – Wells Fargo needs to make this right.”

Got the message

“We heard feedback from our customers and that feedback is very important to us; we are responding by ensuring customers can keep these lines of credit open,” Wells Fargo said in a statement. 

Under the revised policy, customers who have been using their credit lines will continue to have access to their accounts. Customers who haven’t used their personal lines of credit for the last 12 months must call the bank or make a transaction to keep the account active.

“For those inactive customers who do not activate their lines in one of these ways, accounts will be closed on December 2, 2021,” the bank said.

Limits on lending

Wells Fargo faces limits on the amount of money it can lend, a penalty the Federal Reserve placed on the bank until it rectifies certain compliance issues. It stems from the bank’s 2016 fake account scandal when employees were found to be creating credit card and checking accounts in customers’ names without their knowledge in order to meet lofty sales goals.

Wells Fargo ultimately agreed to pay $3 billion to resolve civil and criminal charges stemming from that scandal. With limits on the amount of money it can lend, Wells Fargo would like to emphasize the most profitable loans, which are credit cards and personal loans.

Wells Fargo customers who have a personal line of credit account can expect to hear directly from the bank about the change in policy, either by email or by U.S. Mail.

Wells Fargo has told its customers who have opened one of the bank’s personal lines of credit that those accounts will be closed in the weeks ahead.

In a six-page letter to customers who have one of the accounts, Wells Fargo said it is eliminating that loan product so it can focus on the growing demand for its credit cards and personal loans.

The letter, a copy of which was reviewed by CNBC, acknowledged that consumers’ credit scores could dip once the account is closed. That drew a sharp response from a frequent Wells Fargo critic, Sen. Elizabeth Warren (D-Mass.).

“Not a single @WellsFargo customer should see their credit score suffer just because their bank is restructuring after years of scams and incompetence,” Warren posted on Twitter. “Sending out a warning notice simply isn’t good enough – Wells Fargo needs to make this right.”

Regulatory limits

But in the letter to customers, the bank explained that it is facing regulatory requirements that require it to take this action. In 2018, the Federal Reserve placed limits on the amount of money Wells Fargo could lend until it rectified certain compliance issues.

In 2016, Wells Fargo became caught up in a fake accounts scandal. Employees were found to be creating credit card and checking accounts in customers’ names without their knowledge in order to meet lofty sales goals.

Wells Fargo ultimately agreed to pay $3 billion to resolve civil and criminal charges stemming from that scandal. In agreeing to settle charges with U.S. attorneys, Wells Fargo admitted that it collected millions of dollars in fees and interest generated by the unauthorized accounts. It further said that it harmed the credit ratings of many customers and unlawfully misused customers’ sensitive personal information, including customers’ means of identification.

Echos continue

The scandal was a public relations nightmare that apparently continues to influence some customers’ views. Cesar, of Friendswood, Tex., recently told ConsumerAffairs that the bank had abused his trust.

“Last month I applied for my second personal loan with them, with a promise of no penalties for prompt payment,” Cesar wrote in a post last week. “Big surprise when making an extra payment to the principal, the bank decided to take part of this payment as an advance interest payment when I specifically requested the cashier that the payment went to the principal.”

The bank issued a statement to CNBC confirming the contents of the letter, saying it needed to simplify its product offerings. “We feel we can better meet the borrowing needs of our customers through credit card and personal loan products,” the statement said.

According to CNBC, the Fed’s limit on Wells Fargo’s balance sheet has cost the bank billions of dollars in profits. It has also resulted in the bank’s phase-out of other popular loan products.

HSBC -- the 14th largest bank in the U.S. and sixth largest bank in the world -- is pulling up its stakes in America and completely getting out of the retail banking market.

The bank’s new end game will be to reposition its U.S. Wealth and Personal Banking business with a focus on the more affluent crowd, especially those who are globally connected and have a high net worth.

“We are pleased to announce the sale of the domestic mass market of our US retail banking business. They are good businesses, but we lacked the scale to compete,” said Noel Quinn, Group Chief Executive of HSBC.

“Our continued presence in the US is key to our international network and an important contributor to our growth plans. This next chapter of HSBC’s presence in the US will see the team focus on our competitive strengths, connecting our global wholesale and wealth management clients to other markets around the world.”

How the deal shakes out

Pending regulatory approval, the company’s overall exit strategy includes:

• Exiting 90 branches out of a current branch network of 148 branches.

• Retaining a small network of physical locations in existing markets which will be repurposed into 20-25 international wealth centers.

• Winding down between 35-40 of its remaining branches.

• Exiting all Personal, Advance, and certain Premier banking customers (those with balances below $75,000).

• Exiting all retail business banking customers (small businesses with turnover of $5 million and under).

Who gets HSBC’s current customers?

HSBC said its initial plan is a mixture of divestitures and a wind-down of its branch banking network. The company has already lined up two buyers -- Citizens Bank and Cathay Bank -- to help with part of that. 

Citizens Bank is buying HSBC’s East Coast market and retail banking businesses, as well as its online bank portfolio. Citizens will get 10 additional branches, another 800,000 customers, and $9.2 billion in deposits in the deal.

Cathay Bank, a Sino-American bank based in Los Angeles, California, is purchasing HSBC’s West Coast consumer and retail business banking. That acquisition will add 10 branches, some 50,000 customers, and $1 billion in deposits to Cathay’s balance sheet. HSBC thinks its current customers will be happy with both Citizens and Cathay.

“It was also important for us to find buyers who would be a good fit for our customers and employees,” said Michael Roberts, CEO of HSBC US and Americas. The transactions are expected to close by the first quarter of 2022.

Online banking got a significant boost during the coronavirus (COVID-19) pandemic because nearly all banks closed their lobbies. But a new study of digital banking suggests that only accelerated a trend that had already been taking hold.

A consumer digital banking study by FICO, an analytics firm, found that U.S. and Canadian consumers have embraced a wide range of digital banking features. More of them are opening accounts online instead of going to a nearby branch. They are also increasingly open to biometric identity procedures such as fingerprints and face scans.

"In an effort to help stop the spread of the virus, consumers across North America have accelerated their move from brick-and-mortar branches to digital banking channels," said Liz Lasher, vice president, FICO.  "As a result, consumers' expectations have shifted, placing higher priority on having a seamless and engaging digital experience, which includes establishing account security.”

For financial service providers, Lasher says the message is clear. Providers will have to have a solid digital platform to not only deliver good customer service but also improve fraud protection and financial crime compliance.

Rising expectations

The study found that consumer expectations have risen along with the shift to online banking. The authors say bank customers expect a seamless, uninterrupted experience when opening accounts digitally when using a website or a mobile app. 

They also don't want to be forced to use another channel to complete tasks, particularly those associated with proving their identity. The survey of consumers found that 25% of Americans will go to a competitor or abandon the application completely if they are asked to mail documents, visit branches, or send scanned documents by email 

Banks are also finding themselves in increased competition with fintech firms that provide many of the same financial services but are completely digital.  A recent report by Research and Markets found that fintech firms have a significant head start over traditional banks and are now employing artificial intelligence (AI) and blockchain to improve the customer experience.

“AI interfaces and chatbots have primarily redefined customer service, and its expanding business will enable AI-oriented fintech market to grow at an impressive rate through 2025,” the authors predicted.

TurboTax says consumers aren’t likely to encounter the same frustrating delay in seeing their stimulus payment appear in their bank accounts as they may have during the last round of payments. 

The company confirmed that it’s been working with the Internal Revenue Service (IRS) to ensure that the third economic impact payments don’t get held up this time, as they did for millions in January. 

Earlier this year, TurboTax apologized for an error that caused a delay in payment distribution for many of its customers. Some Americans even had their stimulus payments deposited into the wrong bank accounts by the IRS. TurboTax and the IRS eventually corrected the issue -- and on Monday, the tax preparation company said it has worked with the agency to prevent the same glitch from happening again. 

“The IRS has begun processing stimulus checks. We are working closely with the IRS, and we’ve confirmed that the IRS has accurate bank account information for all TurboTax customers,” TurboTax tweeted.

Payments going out

IRS officials also said they have a new system that enables the agency to quickly correct customer account information errors when they occur. TurboTax added that consumers can find up-to-date information regarding their $1,400 stimulus payment on its website. 

While some consumers have already received their third deposits, others will have to wait until later this week. The IRS said it will continue sending the payments out over the next few weeks. 

Over the weekend, some customers of Wells Fargo and JPMorgan Chase complained that the banks have been slow to post payments to accounts. Wells Fargo has assured customers that it’s not holding the funds.

“We know the importance of the stimulus funds to our customers, and we are providing the payments to our customers as soon as possible on the date the funds are available, based on IRS direction,” Jim Seitz, a spokeswoman for Wells Fargo, told Bloomberg News. “Wells Fargo is not holding the funds.”

As promised, the government began distributing $1.400 payments to Americans over the weekend. Some people got their money as early as Friday while others will have to wait until the middle of this week -- depending on what bank they use.

Some Wells Fargo and JPMorgan Chase customers took to social media over the weekend to complain after the two banks said some payments would post to accounts no earlier than Wednesday of this week

While it’s only a matter of a few days, plenty of Americans showed impatience in social media posts, especially since the Internal Revenue Service (IRS) has a “Get My Payment” page that allows people to check the status of their payment. In many cases, they were able to determine that the government had quickly sent the money to their bank account.

‘Not holding the funds’

According to posts, some people saw that the IRS had sent out the money to others but that their bank was not making it available immediately. Officially, however, the banks note that the payment date on the $1,400 checks is Wednesday, March 17.

“We know the importance of the stimulus funds to our customers, and we are providing the payments to our customers as soon as possible on the date the funds are available, based on IRS direction,” Jim Seitz, a spokeswoman for Wells Fargo, told Bloomberg News. “Wells Fargo is not holding the funds.”

Some people on Twitter accused the two banks of reaping millions of dollars per day by holding onto the funds, a charge that both institutions denied. Wells Fargo says the government plans to distribute the $1,400 payments in tranches, meaning all eligible people won’t get their money at the same time.

Wells Fargo has asked its customers not to call branches to inquire about the status of their payments because bank employees don’t have that information. JPMorgan says customers who are concerned about the timeliness of the payments should set up account alerts that would let them know when the deposit posts to their accounts. 

Customers eager to receive the money contained in the $1.9 trillion coronavirus (COVID-19) aid bill did not appear to be satisfied with that approach. Some declared on Twitter that they would close their accounts and move them to other banks or fintech firms.

Visa has laid out plans to develop a suite of software applications so that banks can enable cryptocurrency trading and allow consumers to purchase and sell Bitcoin and other cryptocurrencies at traditional banks. 

Visa is partnering with South Dakota startup Anchorage Trust Company, which recently became the first cryptocurrency company to receive a federal charter from the Office of the Comptroller of the Currency. Anchorage will act as the “digital custodian” of cryptocurrencies purchased at Visa’s banking partners.

The first bank to take Visa up on its offer and integrate its services into its own is First Boulevard, the self-described “Unapologetically Black, digitally native bank, building generational wealth for Black America.”

Why this is important to Visa

While cryptocurrency is both confusing and alluring to most consumers, its prices keep shooting upward. This has forced bankers and traders to sit up and take notice, and the Security and Exchange Commission (SEC) is trying to get a grip on crypto’s growing popularity in order to protect consumers.

During the company’s recent earnings call, Visa chief executive Al Kelly described Bitcoin as "digital gold" and said cryptocurrencies are "not used as a form of payment in a significant way at this point."

To Kelly, it’s purely a numbers game -- one that he feels will prove itself to be a safe bet long term.

"Our strategy here is to work with wallets and exchanges to enable users to purchase these currencies using their Visa credentials or to cash out onto our Visa credential to make a fiat purchase at any of the 70 million merchants where Visa is accepted globally," Kelly said. 

Kelly’s team has already shored up important cryptocurrency platforms. In the earnings call, he said that 35 of the leading digital currency platforms and wallets have already chosen to issue Visa. Those 35 platforms represent 50 million Visa credentials. 

“The next leading network has a fraction of that,” Kelly claimed. “And it goes without saying, to the extent a specific digital currency becomes a recognized means of exchange, there's no reason why we cannot add it to our network, which already supports over 160 currencies today.”

Wells Fargo & Co. has fired more than 100 employees that the financial services company suspected of underhandedly collecting COVID-19 relief funds. Bloomberg News first reported the incident based on information from a person with knowledge of the situation.

Wells Fargo says members of its staff committed fraud against the Small Business Administration (SBA) “by making false representations in applying for coronavirus relief funds -- specifically the Economic Injury Disaster Loan program (EIDL) -- for themselves,” according to an internal memo reviewed by Bloomberg.

“We have terminated the employment of those individuals and will cooperate fully with law enforcement,” David Galloreese, Wells Fargo’s head of human resources, said in the memo. “These wrongful actions were personal actions, and do not involve our customers.”

More than 500 JPMorgan employees were also caught pulling the same stunt just last month. The mere fact that so many could easily tap into the EIDL program sent shockwaves through the company, leveraging an internal probe. 

How the employees pulled this off

Unlike other business owners and employers, banks have the right to check whether employees had aid deposited into their accounts. Sensing that, the SBA pressed banks to look out for suspicious deposits from the program -- both to their customers and also their own staff. 

One particular aspect of the EIDL program that was evidently too good to pass up was financial advances of as much as $10,000 that don’t have to be repaid. A Bloomberg Businessweek analysis of SBA data in August identified at least $1.3 billion in suspicious payments.The SBA’s inspector general also admitted that more than $250 million in aid was likely given to ineligible recipients in addition to $45.6 million in duplicate payments.

Citibank is being fined $400 million for “longstanding” unsafe or unsound banking practices. 

The U.S. Treasury Department’s Office of the Comptroller of the Currency (OCC) announced Wednesday that it’s penalizing Citibank for its “longstanding failure to establish effective risk management and data governance programs and internal controls.” 

The agency added that it will require the bank to take “comprehensive corrective actions” in the areas found to have deficiencies before it can make any significant acquisitions.

In addition to the fine, Citigroup -- Citibank’s parent company -- is facing a separate but related enforcement action by the Federal Reserve Board. The Fed said it also found "significant ongoing deficiencies" in the bank’s risk-management programs. The Federal Reserve Board has given Citigroup 120 days to submit a report detailing how it will fix the shortcomings identified. 

In a statement, Citi said it is "fully committed" to addressing the concerns laid out by regulators. The company plans to invest more than $1 billion this year in its risk management and controls efforts.

“Citi has significant remediation projects underway to strengthen our controls, infrastructure and governance,” the bank said in a statement. “While we have made progress in each of these areas, we recognize that substantial improvement is still required.”

Several international banks are in the hot seat following the publication of documents showing that terrorists, drug smugglers, and other criminal elements were able to move massive amounts of money through the institutions, despite banks’ own internal warnings.

Critics of the banking industry seized on the report, saying it shows the need for reform of a system they charge has become less responsive to the needs of consumers and legitimate bank customers.

BuzzFeed said it obtained thousands of “suspicious activity reports” (SAR) filed with U.S. government agencies that describe financial transactions bank employees considered suspicious but were processed anyway. BuzzFeed said it shared the information with about 88 publications around the world.

“These documents, compiled by banks, shared with the government, but kept from public view, expose the hollowness of banking safeguards, and the ease with which criminals have exploited them,” BuzzFeed said in its report.

“Profits from deadly drug wars, fortunes embezzled from developing countries, and hard-earned savings stolen in a Ponzi scheme were all allowed to flow into and out of these financial institutions, despite warnings from the banks’ own employees.”

$2 trillion in suspicious transactions

The International Consortium of Investigative Journalists (ICIJ), which worked on the project with BuzzFeed, said the files show more than $2 trillion in financial transactions were flagged in the SARs between 1999 and 2017. While the documents are not proof of wrongdoing, the ICIJ says the leaked documents are only a tiny portion of the reports filed with the U.S. government.

Among the international banks mentioned in the report are HSBC Holdings, JPMorgan Chase, and Bank of New York Mellon. In statements to the media, the banks said they had already instituted reforms and otherwise strengthened their efforts to combat money laundering.

“The findings once again emphasize the need to pursue intelligence-led changes for financial crime risk management - driven by meaningful improvements to public-private sector cooperation and cross-border information sharing, coupled with the use of technology - to enhance the global anti-financial crime framework,” said Tim Adams, CEO of the Institute of International Finance (IIF).

“I hope these findings spur urgent action from policymakers to enact needed reforms," he added.

Adams says the impact of financial crimes, such as money laundering, are felt well beyond the financial sector. He contends it poses “grave threats” to all of society.

Federal and state authorities have launched an investigation into Wells Fargo’s lending practices under the government’s small business relief effort, the Paycheck Protection Program (PPP). 

Wells Fargo is one of several banks being sued over allegations of unfair practices in processing loans under the program. Lawsuits have also named Frost Bank, JPMorgan Chase, US Bancorp, and Bank of America. The banks have been accused of processing applications for larger loans more quickly than smaller loans. 

Wells Fargo disclosed details of the investigation in its quarterly earnings filing with the Securities and Exchange Commission (SEC). The nation’s fourth largest bank said that some elements of the probe have already progressed to the formal stage. 

Last month, just three days after announcing its participation in the PPP, the bank announced that it would stop accepting new loan applications under the program. The company said it made the decision in part because the Federal Reserve had imposed a cap on how many loans it could make as a penalty for its past blunders. 

“Today, the company continues to operate in compliance with an asset cap imposed by its regulator due to actions of past leadership,” Wells Fargo CEO Charlie Scharf said in April. “We are committed to helping our customers during these unprecedented and challenging times, but are restricted in our ability to serve as many customers as we would like under the PPP.” 

Facing investigation 

After it came to light that Wells Fargo had created millions of checking and credit card accounts without customers’ knowledge or permission, the Fed capped the amount of loans it could offer. 

Upon announcing its participation in the PPP, Wells Fargo said it would limit the amount of money it loaned through the program to $10 billion. The emergency assistance would only be extended to companies with fewer than 50 employees or to non-profit organizations. 

In an interview with Reuters, Wells Fargo spokesperson Manuel Venegas said that small businesses with fewer than 25 employees accounted for 90 percent of the applications and that median loan requests were under $110,000. 

Without elaborating further, Wells Fargo said Tuesday in a regulatory filing that it has received "formal and informal inquiries from federal and state governmental agencies regarding its offering of PPP loans.” 

Amid uncertainty stemming from the coronavirus pandemic, Wells Fargo is moving away from offering home equity lines of credit (HELOC). 

Company spokesman Tom Goyda said in a statement that the choice to temporarily stop accepting applications for HELOCs “reflects careful consideration of current market conditions and the uncertainty around the timing and scope of the anticipated economic recovery.” 

The nation’s fourth largest bank said it will stop accepting applications for all new home equity lines of credit after April 30. Rival JPMorgan Chase announced a similar move earlier this month but suggested that customers could still draw from their home’s equity through a cash-out refinance of their existing mortgage. 

"Due to the economic uncertainty created by COVID-19, we’re temporarily not accepting applications for new home equity lines of credit (HELOC). This will protect both you and the bank,” the company said on its website. 

CNBC noted that during times of economic hardship, HELOCs are “riskier products for banks because in a foreclosure, the lender who made the primary mortgage is first in line to get paid in a recovery.” 

Wells Fargo said it will continue to analyze market conditions to determine when to resume the extension of HELOCs. 

In the midst of the coronavirus pandemic, the Federal Reserve will temporarily let Wells Fargo exceed the asset capacity it imposed on the bank in February 2018. 

The central bank put the cap on the bank after it came to light that Wells Fargo had opened millions of accounts in customers’ names without their knowledge or permission. The bank is still working to improve its reputation in the wake of the scandal. 

The Fed announced Wednesday that it will let Wells Fargo exceed the $1.95 trillion cap in order to allow it to participate in the emergency small business stimulus loan program, known as the Paycheck Protection Program.

“Due to the extraordinary disruptions from the coronavirus, the Federal Reserve Board on Wednesday announced that it will temporarily and narrowly modify the growth restriction on Wells Fargo so that it can provide additional support to small businesses,” the Fed said in a statement.

Still being held accountable for past actions

The Fed’s decision comes a few days after Wells Fargo announced that it wouldn’t be able to fully participate in the program. On Sunday, Wells Fargo said its participation would be limited to $10 billion due to the regulatory restrictions. 

"While we are actively working to create balance sheet capacity to lend, we are limited in our ongoing ability to use our strong capital and liquidity position to extend additional credit," said Wells Fargo CEO Charles Scharf.

In a separate statement, Scharf said the Fed’s temporary lifting of the restriction “does not, and should not, in any way relieve us of our obligations” under the 2018 consent order.

“While the asset cap does not specifically restrict Wells Fargo’s participation in this program, this action by the Federal Reserve will enable Wells Fargo to provide additional relief for our customers and communities,” Scharf said.

The Fed issued a similar statement, saying that it “continues to hold the company accountable for successfully addressing the widespread breakdowns that resulted in harm to consumers identified as part of that action and for completing the requirements of the agreement.”

Wells Fargo reopened its PPP website for applications on Wednesday.

The Federal Reserve Board made a move on towards relaxing investment rules for banks on Thursday. In essence, the move aims to give banking entities permission to invest in or even sponsor hedge funds and private equity funds, aka "covered funds.”

The proposal would overhaul the Volcker Rule, which, as part of the 2010 Dodd-Frank law, restricted United States banks from making certain kinds of speculative investments that hold no upside for their customers. If approved, banks can gamble on chancy investments using customer deposits.

The Fed believes the Volcker rule has created compliance uncertainty and saddled banks with limits on certain services and activities that the rule was not designed to control.

“It is inescapable that compliance and enforcement have been difficult and can be simplified for both banking entities and regulators,” said Randal K. Quarles, Vice Chair for Supervision at the Federal Reserve.

Getting it right this time around

The Fed tried its best to turn that around in 2019 by simplifying requirements on trading restrictions. Thursday’s proposal would modify the restrictions further by allowing banks to take an ownership interest in venture capital funds, or pools of investment that might focus on a small business or start-up. The changes would also address the treatment of certain foreign funds.

“As I have said before, the intent behind the Volcker rule is the right one -- banks should not use deposits that are insured by taxpayers to make risky proprietary trades or investments in hedge funds and private equity funds,” said Board Chair Jerome H. Powell in his opening remarks to the board. 

“We now have considerable supervisory experience putting that common sense prohibition into practice, and we have learned that a simpler, clearer approach to implementing the rule makes it easier for both banks and regulators to carry out the intent of the rule. … This should (also) reduce complexity and reduce compliance burdens for banks and their investors.”

The potential downside

Are the proposed changes a good thing or a bad thing for banks? One banking trade group says further inspection on the impact on all sizes of banks is needed.

Chris Cole, counsel for the Independent Community Bankers of America, a trade group that represents thousands of "community banks,” remarked that the proposal merits some added scrutiny regarding whether relaxing restrictions on big banks’ venture capital investments went too far.

“The group’s biggest concern is that if big banks’ venture capital investments went belly up and destabilized the banks themselves, the Federal Deposit Insurance Corporation would end up having to bail them out using money collected for the deposit insurance fund,” Cole told the New York Times. “After that, the premiums on the deposit insurance that all banks are required to pay would go up.”

Following a whirlwind of scandals and regulatory actions, Wells Fargo CEO, president, and board member Tim Sloan has announced that he will be stepping down from his position at the company effective immediately. The executive said he would fully leave the company and enter retirement at the end of June.

“It has become apparent to me that our ability to successfully move Wells Fargo forward from here will benefit from a new CEO and fresh perspectives. For this reason, I have decided it is best for the Company that I step aside and devote my efforts to supporting an effective transition,” Sloan said.

In a news release, Wells Fargo said that C. Allen Parker will serve as interim CEO and president until the company can complete an external search for a new candidate to replace Sloan.

“Tim Sloan has served this Company with pride and dedication for more than 31 years, including in his role as CEO since October 2016. He has worked tirelessly over this period for all of our stakeholders in the best long-term interest of Wells Fargo,” said Wells Fargo Board Chair Betsy Duke. “His decision, and today’s announcement, reflect that commitment and his belief that a new CEO at this time will best position the Company for success.”

Scandals abound

Sloan’s departure from the company follows years of hardship at Wells Fargo, which has found itself at the center of several high-profile scandals..

Back in 2016, the bank admitted that its employees had opened millions of accounts in customer’s names without their knowledge or consent. Over the next two years, the company would also face charges related to wrongful home foreclosures, hidden auto loan insurance policies, and various investigations brought by all 50 U.S. states.

In response to Sloan’s retirement, consumer watchdog Allied Progress said that the move was a necessary one. However, the group says Wells Fargo has a long way to go to make up for its past transgressions.

“While this is certainly good news for consumers after so many bad headlines about ongoing abuses at Wells Fargo, let’s be clear: the culture of greed at Wells Fargo and other major banks goes beyond one CEO,” the group said in an emailed statement to ConsumerAffairs.

“Sloan stepping aside won’t magically solve what are obviously deep, systemic problems within these institutions that continue to test regulators and see what they can get away with.”

As the result of a recent settlement with all 50 states, Wells Fargo has established a program to help consumers wronged by the bank’s various consumer law violations get relief.

The dominoes began to fall in September 2016 when the bank revealed that employees had opened millions of checking and credit card accounts without customers’ knowledge or permission. The bank paid a huge fine and the CEO took early retirement.

Later, it was revealed the bank had taken other shortcuts that cross legal and ethical lines. Wells Fargo admitted it had sold unnecessary insurance to some auto loan customers without their knowledge. It also revealed it charged some improper fees to some mortgage customers.

Then in 2017, the company acknowledged that it didn't offer mortgage modifications to hundreds of more borrowers who could have qualified for them. Many of those customers eventually lost their homes to foreclosure.

‘Perplexed and outraged’

“Customers of Wells Fargo were perplexed and outraged after the bank improperly enrolled them into programs and policies they did not want,” said Florida Attorney General Ashley Moody. “With this redress program now in place as part of our multistate action, customers will be able to contact Wells Fargo directly and get a quicker response to questions about their eligibility for relief.”

Wells Fargo has established separate call centers for each infraction to handle consumer inquiries. Consumers with questions or concerns may call the following Wells Fargo escalation phone numbers:

• Unauthorized Accounts / Improper Retail Sales Practices: 1(844) 931-2273

• Improper Renters and Life Insurance Referrals: 1(855) 853-9638

• Force-Placed Collateral Protection Auto Insurance: 1(888) 228-9735

• Guaranteed Asset/Auto Protection Refunds: 1(844) 860-6962

• Mortgage Interest Rate Lock Extension Fees: 1(866) 385-5008

Final settlement

The escalated redress program was the result of a December settlement with the attorneys general of all 50 states and the District of Columbia, which resolved charges that the bank violated state consumer protection laws.

The settlement also requires Wells Fargo to establish and maintain a website containing information to help consumers determine if they are eligible for redress. The bank is also required to provide periodic reports to the states about its ongoing remediation efforts.

Wells Fargo customers found they couldn’t access their online bank accounts Thursday, nor could they withdraw money from Wells Fargo ATMs.

“We’re experiencing system issues due to a power shutdown at one of our facilities, initiated after smoke was detected following routine maintenance,” the bank said in a brief statement. “We’re working to restore services as soon as possible. We apologize for the inconvenience.”

KULR-TV in Montana reported that a bank employee told the station the outage was caused by a fire at a server farm in Shoreview, Minnesota. The bank has not confirmed a fire was involved.

Whatever the cause, some Wells Fargo customers may have been caught short on cash or blocked from paying a bill just before the deadline. Arielle O'Shea, NerdWallet's banking specialist, says it’s possible some Wells Fargo customers could be facing late fees, interest on missed credit card payments, or may have to go without cash to pay for everyday expenses.

"Unfortunately bank outages have become fairly commonplace – if you haven’t experienced one yourself, you might be in the minority,” O’Shea said in an email to ConsumerAffairs. “To safeguard yourself from these potential situations, it’s a good idea to have an emergency savings account at a separate financial institution to at least help you cover the basics while your account is down.”

Even though customers can’t access their money at the moment, they can rest assured that it’s safe, as long as it’s deposited in an FDIC-insured financial institution.

O’Shea says it’s always a good idea to pay your bills a few days before the due date if you can, just in case your bank suffers a service interruption.

Wells Fargo has agreed to pay the state of California $5 million to settle claims that the financial services company established insurance policies for its customers, and then charged them without their approval.

In addition, the company also agreed to surrender its insurance licenses for two years and to pay an additional $5 million if it decides it wants to sell insurance in California at any time in the future.

The genesis of Wells Fargo’s consumer breach dates back to 2008 when company employees would, on occasion, tell consumers to enter their personal information on a policy application simply to receive a quoted rate. However, that rather innocent act took a wrong turn when company employees later submitted the application to the insurer to purchase the policy without getting consumers’ permission.

"The Department of Insurance’s investigation found that Wells Fargo was signing up and charging customers for insurance without their consent," said California Insurance Commissioner Dave Jones. "Banks and other financial institutions should never be allowed to prey on their customers’ trust without being held accountable."

In a statement, Wells Fargo spokeswoman Catherine Pulley said that the company has worked to make things right for customers and earn back their trust and had previously stopped issuing new insurance policies.

It’ll be awhile before Wells Fargo gets a good night’s sleep. This move comes on the heels of the company agreeing to pay $575 million to settle allegations made by all 50 states and the District of Columbia that the bank violated consumer protection laws.

Wells Fargo has agreed to pay $575 million to settle allegations made by all 50 states and the District of Columbia that the bank violated consumer protection laws, Iowa’s attorney general announced on Friday.

The bank will also create and implement a review program that will allow consumers who have not received restitution through other programs to seek a review for possible relief. The agreement follows several years’ worth of allegations that the bank engaged in practices deemed to be either unethical, dishonest, or illegal.

In 2016, Wells Fargo revealed that employees had opened millions of checking and credit card accounts without customers' knowledge or consent in an effort to meet sales goals. The bank was also fined for selling insurance to auto loan customers without their knowledge.

In October, Wells Fargo reached a $65 million settlement between the State of New York and Wells Fargo over the improperly opened accounts.

“Wells Fargo’s conduct was unlawful and disgraceful,” California’s attorney general, Xavier Becerra, said in a news release on Friday. Under the settlement, California will get almost $149 million.

"This agreement is unique and one of the largest multi-state settlements with a bank since the National Mortgage Settlement in 2012," Iowa Attorney General Tom Miller said in a statement. “This significant dollar amount, on top of actions by federal regulators, holds Wells Fargo accountable for its practices."

In a statement of its own, Wells Fargo said the agreement, which must first be approved by a judge before it’s finalized, “underscores our serious commitment to making things right in regard to past issues as we build a better bank.”

The bank’s troubling business practices have resulted in over $2 billion in fines and an “unprecedented” action by the Federal Reserve to limit Wells Fargo's growth until the bank changes its management culture and risk control procedures.

Last month, Wells Fargo admitted in an SEC filing that it wrongly denied mortgage modifications to 870 eligible borrowers, resulting in 545 people losing their homes in foreclosure proceedings.

The company said at the time that it would set aside some money to compensate the victims, though how much exactly wasn't made clear.

Now, it appears that Wells Fargo is pinning the amount at about $25,000, according to one of the victims who is now going public with his story.

That doesn’t begin to cover actual losses, an attorney for former homeowner Jose Aguilar told CBS News.

Denied loan modification

Aguilar lived in a house with his wife and children in upstate New York, not far from the manufacturing plant where he worked. Problems for the family’s living situation began when they found mold in the house and couldn't afford to pay for both the repairs and their monthly mortgage.

The family applied for a mortgage modification, and Aguilar says Wells Fargo suggested he might qualify.

Aguilar then waited for an official answer from Wells Fargo amid delays. It took over a year before the bank responded with instructions to apply for the modification once more.

When he did, the bank denied the application. Since he had already fallen behind on payments over the past year, the foreclosure proceedings began.  

The family lost their home in October 2015, and Aguilar's wife left him as a result, he told ABC.  

Then Wells Fargo sent Aguilar a letter earlier this year, explaining that the loan modification should have been approved. The bank also gave him a $25,000 check for his troubles.

"Wells Fargo has not been transparent at all about how this happened," Aguilar’s lawyer added.

Aguilar now lives in a friend’s basement with his son because the foreclosure ruined his credit, making it impossible to secure a rental.

Wells Fargo still hasn't completely put its bad news behind it. The bank has acknowledged that it didn't offer mortgage modifications to hundreds more borrowers who could have qualified for them. Many of those customers eventually lost their homes to foreclosure.

The bank thought it had put the issue to rest in August when it revealed that it miscalculated fees in its formula to determine whether borrowers were eligible for mortgage modifications. At the time, it determined that it wrongly denied modifications to more than 600 mortgage customers and that 400 of them eventually saw their homes go into foreclosure.

In a filing with the Securities and Exchange Commission this week, Wells Fargo admitted that an additional 870 mortgage customers were wrongly denied modifications for the same reason. As a result, it said 545 borrowers eventually lost their homes -- more than the number in the initial revelation.

Wells Fargo said the discrepancy is due to the fact that it initially reviewed homes in the foreclosure process between April 2010 and October 2015. The higher numbers resulted from extending the review period.

Affected consumers to be compensated

The bank has said that it has set aside money to compensate those customers who were wrongly denied mortgage modifications, but it is unclear so far how it will be done.

“Our plan is to work with each customer to arrive at a resolution that addresses their particular situation,” a Wells Fargo spokesman said in a statement to the Los Angeles Times. “Every customer situation is different. As a result, we don’t have any details on the amount we expect to pay out in remediation.”

Wells Fargo's troubles began in late 2016 when it reported that employees had opened millions of checking and credit card accounts for customers without their permission or knowledge. As a result, the CEO took early retirement and 5,000 bank employees were fired. Wells Fargo also paid a large fine.

Since then Wells Fargo has revealed that it sold thousands of insurance policies to auto loan customers who didn't need the coverage. It also reported that it accessed improper fees on some mortgage loans.

Sen. Elizabeth Warren (D-Mass.), a harsh critic of Wells Fargo from the earliest days of the unauthorized accounts scandal, is pressing for continued sanctions against the bank.

Warren has sent a letter to Federal Reserve Board Chairman Jerome Powell urging him to maintain the Fed's punitive growth restrictions on Wells Fargo until the bank replaces CEO John Sloan with, in the senator's words, “someone who is not deeply implicated in the bank's misconduct.”

Sloan served as Wells Fargo's chief operating officer (COO) before being elevated to CEO, replacing John Stumpf, who took early retirement following the 2016 revelation that Wells Fargo employees had opened millions of checking and credit card accounts without customers' knowledge or consent.

In response the Fed placed restrictions on the bank, including limits to how quickly, and to what extent it could grow.

Follows bank’s positive earnings report

Warren's letter follows last week's third quarter earnings report, showing Wells Fargo earned more revenue than expected during the period, even as its bottom line came in slightly softer than expected. On a conference call with analysts last week, Sloan said the results reflect the positive changes the bank has been making.

The Fed issued an order in February telling Wells Fargo it would not be permitted to get any larger until it improved its internal controls. In her letter to Chairman Powell, Warner argued those changes will not happen until there is a change at the top.

Bank confident it’s meeting requirements

In a statement to the media, Wells Fargo said it continues to have a “constructive dialog” with the Fed and is working to satisfy its obligations under the consent order. A spokesman said the bank is confident that it is meeting its requirements.

"Mr. Sloan's long track record at the bank demonstrates little ability to 'effectively manage the firm's activities' - and should give the Federal Reserve little confidence that he can help transform the bank's culture and operations as the Cease and Desist Order requires," Warren wrote in her letter.

"To effectively enforce the requirements in the February 2, 2018 Cease and Desist order, the Federal Reserve should not remove the growth cap on WFC until the Board replaces Mr. Sloan with a new CEO who has not contributed to the very problems the Federal Reserve is seeking to fix," the letter continued.

In the wake of the 2016 scandal Warren not only pushed for the removal of Stumpf as CEO but also urged the Fed to remove 12 members of the bank's board of directors. She renewed that call in July 2017 when it was revealed as many as 800,000 auto loan customers were sold insurance they didn't need.

This story has been updated to include a response from Wells Fargo.

A report by a management consulting firm predicts Wells Fargo will suffer the loss of thousands of banking customers in the next year who will take with them billions of dollars in deposits.

The firm, cg42, said it performs a periodic review of the banking industry to predict customer attrition across the top 10 U.S. retail banks and analyze its financial impact to the industry.

“The results of our Wells Fargo Mini-Study paint a bleak picture for the largest U.S. retail bank and unfortunately validate the ominous findings from our 2011—2015 Retail Banking Competitive Vulnerability Studies,” cg423 said in a statement.

In that previous report, it predicted Wells Fargo stood to lose tens of billions of dollars in revenues and deposits if it didn't address consumers biggest issue. The report says customers overwhelmingly reported that Wells Fargo kept trying to sell them financial products they didn't want.

“Our focus is on restoring trust with all of our stakeholders and building a better Wells Fargo,” the company said in an email to ConsumerAffairs. “With this in mind, we have set a goal of becoming the financial services leader in customer service and advice.”

A spokesman for the bank suggested there is little evidence for cg42's predictions. On Friday morning, the bank reported third quarter revenue of $21.9 billion, slightly beating estimates.

“We are evolving our business to deliver what customers want — including innovations that help us serve them better while attracting new customers,” the spokesman said. “At Wells Fargo we are focused on enhancing customer value, delivering best-in-class experiences.”

Problems began with the scandals

The cg42 report traces the consumer unrest to Wells Fargo's well-documented scandals. In 2016, it revealed that employees had opened millions of checking and credit card accounts without customers' knowledge or consent. It was also fined for selling insurance to auto loan customers without their knowledge.

The cg42 report found an increase in the number of consumers who said they are dissatisfied with the bank. The biggest claim charged Wells Fargo engaged in “dishonest, unethical, or illegal practices.” Customers also reported the bank pushed them to agree to products and services they didn't want.

The report estimated that as many as 30 percent of the bank's customers are in risk of closing their accounts and moving to another financial institution. It said up to $93 billion in Wells Fargo deposits could be at risk. According to an analysis by CNN, that's about 7 percent of the bank's total deposits.

Separately, Reuters reports that Wells Fargo has expanded its Washington lobbying team, specifically to inform lawmakers about a number of “good citizen” efforts it has recently undertaken. The bank has been publicizing its support of programs ranging from financial literacy to care for homeless veterans.

Wells Fargo is trimming its ranks as it adapts to the new banking environment in which consumers are performing many traditional banking services for themselves with digital tools.

The bank has announced plans to reduce its workforce by up to 10 percent in the next three years, eliminating as many as 26,000 jobs. The force reduction will be achieved through layoffs and attrition.

Company CEO Tim Sloan said the move is designed to making the bank more “customer-focused,” streamlined, and in a better position to achieve long-term success.

“We are continuing to transform Wells Fargo to deliver what customers want – including innovative, customer-friendly products and services – and evolving our business model to meet those needs in a more streamlined and efficient manner,” Sloan said

Keeping up with customer preferences

The CEO said Wells Fargo is simply keeping up with customer preferences, including the demand for more digital self-service capabilities, a trend that is growing throughout the banking industry. Mobile banking tools, allowing customers to deposit checks using their phones, is reducing the need for physical locations, as well as people to staff them.

Wells Fargo is only two years removed from a major scandal that resulted in the firing of 5,000 employees and the early retirement of its CEO. In 2016 the bank revealed that employees had opened millions of checking and credit card accounts in customers' names without their knowledge.

That was followed by revelations the bank had sold auto loan customers insurance coverage they didn't need and had wrongly foreclosed on as many as 400 homeowners. The bank has paid well over $3 billion in fines and settlements since 2016. It has also had to fend off a number of class-action lawsuits.

Two years of progress

Sloan says the bank has made progress over the last two years to improve customer service and efficiency. These efforts have been reflected in its recent advertising campaign, noting the company has a long history but effectively became a new bank, with a new commitment to customers, in 2018.

“We are addressing past issues, enhancing our focus on customers, strengthening risk management and controls, simplifying our organization, and improving the team member experience – all in the spirit of building a better Wells Fargo for our customers,” Sloan said.

Wells Fargo is reportedly considering bolstering its shrinking student lending business by offering loans that let customers retire their government-backed student debt, Bloomberg reports.

Wells Fargo wants to extend its current offerings to include federal student loan refinancing. Previously, the bank offered only private student loan consolidation, in which a borrower with multiple Wells Fargo private student loans could consolidate them into a single loan or refinance any one of them.

“We continue to assess the needs of our customers on refinancing of federal loans into private,” Well Fargo’s Head of Personal Lending John Rasmussen told Bloomberg. “We’re sizing what that should look like, how we’d do that in a real customer-focused way.”

Building relationships with students

The move would help boost the lender’s student-loan portfolio, which was down to $11.5 billion at the end of June from $12.2 billion last year. Rasmussen cited numerous consumer scandals and accelerated loan repayments due to an improving economy as reasons for the smaller portfolio.

Although no final decision has been made yet, refinancing federal student loans could help Wells Fargo attract more college-aged consumers as customers and improve its reputation.

Earlier this month, Wells Fargo admitted to having wrongly foreclosed on hundreds of homes in the period between April 2010 and October 2015 due to a computing error caused by a mortgage underwriting tool. The bank said it put aside $8 million to repay the affected customers.

For Wells Fargo, the bank that has been slapped with well over $3 billion in fines since 2016, the hits just keep on coming.

In a quarterly filing with the Securities and Exchange Commission (SEC), the bank revealed its purchase of low income housing credits is now the focus of a federal investigation.

The bank also concedes that, because of a computer error, it may have foreclosed on as many as 400 homes.

Wells Fargo said its internal review found that 625 of its mortgage customers were denied mortgage modifications, even though they qualified for the program. The bank reports that 400 of those mortgage customers ultimately lost their homes.

The error occurred in the formula used to calculate attorney fees, which changed between 2010 and 2015. Because of the error, some customers were wrongly denied a chance for a modification. Wells Fargo said it has set aside $8 million to compensate those customers and settle with government agencies.

For Wells Fargo, it has been a turbulent two years, with a string of missteps and mistakes that have tarnished the bank's reputation. In its most recent advertising campaign, the company acknowledges its mistakes (see video below) and has sought a reset with the tag line, "Established 1852. Re-established 2018."

Bad news needs to end

Of course, for that to be effective, the bad news has to end.

In the last two years, Wells Fargo has:

• Paid $185 million to settle charges it opened checking and credit card accounts for millions of customers without their knowledge

• Paid $4 million to settle charges of improper trading

• Paid $1 billion for policies that harmed mortgage and auto loan customers

• Paid $2 billion to settle charges of misrepresenting the value of its mortgages

In February, the Federal Reserve warned Wells Fargo that the bank's board of directors must exercise better oversight of the company's senior management, and that the bank's performance would be closely monitored by regulators.

In the wake of the 2008 financial crisis, the Justice Department accused Wells Fargo, among other institutions, of selling mortgages it knew were based on inaccurate income information.

The bank has agreed to settle those charges, without admitting liability, and pay a $2 billion fine.

The investigation of Wells Fargo began soon after the near-collapse of the financial system, when a wave of home foreclosures destroyed the value of mortgage-backed securities. In many cases the bad loans turned out to be subprime mortgages, granted to borrowers who couldn't really afford them.

In the case of Wells Fargo, government investigators alleged the bank issued mortgages to consumers it knew had provided inaccurate information about their income, then sold those mortgages in the securities market.

The collapse of the mortgage-backed securities market was partially responsible for the bankruptcy of Lehman Brothers in September 2008, which began the financial crisis and turned a garden variety recession into the Great Recession.

Major repercussions

"Abuses in the mortgage-backed securities industry led to a financial crisis that devastated millions of Americans," said Alex G. Tse, acting U.S. Attorney for the Northern District of California.

Tse says the settlement holds Wells Fargo responsible for originating and selling tens of thousands of loans that were packaged into securities and subsequently defaulted. Wells Fargo, however, agreed to the settlement without admitting it did anything wrong.

“We are pleased to put behind us these legacy issues regarding claims related to residential mortgage-backed securities activities that occurred more than a decade ago,” said Wells Fargo CEO Tim Sloan.

'Unacceptable discrepancies'

According to the Justice Department, Wells Fargo's own internal comparisons of loan applicant income statements and their actual tax returns filed with the IRS showed 70 percent had "unacceptable" discrepancies in stated income.

Wells Fargo has been writing plenty of checks to the government in recent years to wrap up issues unrelated to this week's mortgage-backed securities settlement. It paid more than $185 million in 2016 to settle charges that it opened checking and credit card accounts for millions of customers without their knowledge.

In April of this year, it paid $1 billion in connection with its sale of products connected to car loans and mortgages.

In June, it agreed to a settlement with the Securities and Exchange Commission (SEC), resolving charges that its advisors unit engaged in misconduct in the sale of financial products, known as market-linked investments (MLI), to small investors.

More Wells Fargo customers may be in line for refunds.

The bank, which was hit with huge fines in 2016 after it opened checking and credit card accounts for customers without their knowledge, has spent the last three years auditing the bank's marketing of add-on services.

The investigation has centered around credit monitoring and identity theft protection services some customers said they paid for but never received.

The Wall Street Journal, citing sources familiar with the issue, reports many customers who paid for pet insurance and other add-on services will receive tens of millions of dollars in refunds.

The matter is reportedly under investigation by the Consumer Financial Protection Bureau (CFPB), which is trying to determine whether customers were deceived or knew how to cancel the products, for which they paid a monthly fee.

Under review

Wells Fargo told The Journal it is still “reviewing add-on products sold to consumers by the bank or its service providers and if issues are found during this review, we will make things right with customers in the form of refunds or remediation.”

A bank spokeswoman told the newspaper the bank is cooperating with regulators in an ongoing review.

This is just the latest challenge for Wells Fargo, which in 2016 was slapped with a $185 million fine from federal and state regulators for the unauthorized checking and credit card accounts, opened for 3.5 million unsuspecting customers.

The following year it was revealed that some Wells Fargo customers unknowingly purchased auto insurance they didn't need. The bank said the additional costs may have led to 20,000 defaults and car repossessions.

Financial advisors under scrutiny

Earlier this year, a whistleblower charged that the bank's financial advisor unit often made decisions with an eye toward compensation rather than what was best for the client.

Last month, Wells Fargo agreed to a settlement with the Securities and Exchange Commission (SEC), resolving charges that its advisers unit engaged in misconduct in the sale of financial products, known as market-linked investments (MLI), to small investors.

According to the SEC, the bank was able to charge huge fees by encouraging its retail customers to actively trade the products, even though they are designed to be held until they mature.

The SEC found that from 2009 to 2013, Wells Fargo Advisors improperly encouraged investors to sell MLIs before maturity, then invest the money in new MLIs. The bank assessed substantial fees on each transaction.

Wells Fargo has agreed to a settlement with the Securities and Exchange Commission (SEC), resolving charges that its advisors unit engaged in misconduct in the sale of financial products, known as market-linked investments (MLI), to small investors.

The SEC said its investigation found that the bank was able to charge large fees by encouraging its retail customers to actively trade the products, even though they are designed to be held until they mature.

The SEC said that from 2009 to 2013, Wells Fargo Advisors improperly encouraged investors to sell MLIs before maturity, then invest the money in new MLIs. The bank assessed substantial fees on each transaction.

$4 million penalty

The bank agreed to pay a $4 million penalty and return money to investors. In a statement, Wells Fargo said it cooperated with the SEC investigation.

The SEC said the improper activity took place despite bank policies that prohibited it. Investigators point to rules in place barring clients from engaging in short-term trading or "flipping" of assets, but they note that Wells Fargo supervisors routinely signed off on these transactions.

“It is important that brokers do their homework before they recommend that their retail customers buy or sell complex structured products,” said Daniel Michael, Chief of the Enforcement Division’s Complex Financial Instruments Unit. “The products sold by Wells Fargo came with high fees and commissions, which Wells Fargo should have taken into account before advising retail customers to sell their investments and reinvest the proceeds in similar products.”

Past transgressions

This is far from the first time that Wells Fargo has run afoul of financial regulators. In September 2016, bank officials revealed that employees had opened checking and credit card accounts for millions of Wells Fargo customers without their knowledge or permission. The scandal ultimately resulted in a $185 million fine and dozens of lawsuits.

In the last year, Wells Fargo has been under investigation by regulators and faced lawsuits for the way it conducted its auto loan and mortgages businesses. Last year, the bank faced a class action lawsuit by plaintiffs who said they were charged extra fees when their mortgage applications were denied, even when the denial was due to a bank error.

The case revolved around rate-lock extension fees -- the fees borrowers pay to "lock in" an interest rate for a specific period of time, usually 30 to 45 days. If it takes longer than that for the loan to be approved, the borrower is charged an extra fee.

Also in 2017, Wells Fargo revealed that 570,000 consumers who financed auto purchases through the bank may have been sold a collateral protection insurance (CPI) without their knowledge or consent.

The Bank for International Settlements released a new report that Bitcoin isn’t quite ready for the mass market just yet -- and based on recent studies, it may never be.

The Switzerland-based bank deemed the “intense interest” in Bitcoin and other cryptocurrencies had prompted many to look “beyond the hype” at their contribution to the current economy. BIS said that Bitcoin suffers from a “range of shortcomings” that would prevent it from ever reaching its fullest potential, as was expected by the masses.

In its report, BIS said cryptocurrencies consume too much electricity, are too unstable, and are subject to too much manipulation and fraud to ever really make it in today’s economy. The company also believes one of Bitcoin’s biggest flaws is in its nature of being created, transacted, and accounted for on a distributed network of computers.

Most importantly to consumers, BIS found that the processing of all Bitcoin payments “could bring the internet to a halt.”

Breaking the internet

Supporters of Bitcoin are drawn to the currency’s decentralized nature, meaning that it’s not tied directly to a bank or the Federal Reserve. All Bitcoin transactions are kept in a digital ledger.

However, every single Bitcoin transaction is added to the digital ledger, and as the ledger grows, it ultimately slows down the internet. Using Bitcoin or a similar cryptocurrency for a foreign retail purchase will almost instantly grow the ledger beyond what a typical computer server is capable of handling.

To keep up with verifying payments, users would need supercomputers, but the large amounts of data being transferred and shared between users would be enough to stop the internet entirely.

Using this vast amount of data also presents an energy problem. The amount of energy Bitcoin uses every year -- 32 terawatts -- could power three million U.S. households. Comparatively, Visa processes billions of transactions each year and the energy used could power just 50,000 American homes.

“As Bitcoin grows, the math problems computers must solve to make more Bitcoin get more and more difficult,” said meteorologist Eric Holthaus, inferring that even more energy will soon be required.

Bitcoin concerns

Experts in the field have been warning consumers of the various concerns Bitcoin presents to users. For starters, the cryptocurrency presents a large threat to the environment, as it hurts continued efforts to combat climate change.

“Bitcoin is slowing the effort to achieve a rapid transition away from fossil fuels,” said Holthaus.

Holthaus estimated that at this rate, if a significant change isn’t made to the way Bitcoin is processed, the cryptocurrency will be consuming enough electricity to power the entire country by 2019. Six months later, that energy need could equal the entire world’s consumption.

Along with the environment, BIS says the ever-changing prices of Bitcoin are another concern for consumers. Bitcoin’s prices surged to $19,000 late in 2017 and has since decreased to under $7,000.

Users also have to pay a rather hefty fee each time they complete a Bitcoin transaction to have it added to the digital ledger. When the demand for the cryptocurrency goes up, the fee goes up. Around December of last year when Bitcoin was on the rise, users were charged a $57 processing fee.

“Just imagine, if you bought a $2 coffee with Bitcoin, you would have had to pay $57 to make that transaction go through,” said Hyun Song Shin, BIS’ head of research.

Late Tuesday, a federal judge ordered Wells Fargo to pay over $97 million to California mortgage workers who weren’t paid enough for their breaks. The damages, which come after a January ruling that found Wells Fargo in violation of California’s strict labor laws, are nearly four times what the company argued it should owe.

The ruling applies to those workers - both mortgage consultants and bankers - who worked in California between March 2013 and August 2017.

“Finally, I feel like justice has been served,” said Jackie Ibarra, a former Wells Fargo employee and the suit’s lead plaintiff. “It’s unfair not to pay us properly when we’re essentially working on commission.” Ibarra worked for Wells Fargo for 10 years.

However, the company isn’t going down without a fight. Bank representatives say Wells Fargo plans to appeal the ruling.

“We disagree and believe the court misunderstood our compensation plan and misunderstood the law,” a Wells Fargo spokesperson said.

Violating the law

The main accusation in the case involves the company’s inability to properly compensate employees for their break time.

California law mandates that employees must have a 10-minute paid break for every four hours they’re on the clock, and U.S. District Judge Percy Anderson found Wells Fargo in violation of that regulation.

While Wells Fargo tried to knock the settlement down to around $24 million -- the hourly rate the employees would be owed for their time on break -- the judge sided with the employees. Judge Anderson said the employees’ break pay should also factor in their commissions, which are rather a significant portion of their income, and noted that the commissions make the hourly wages “essentially irrelevant.”

Another big blow

This hefty settlement is one of many hits Wells Fargo has taken as of late. Over the last year and a half alone, the company has been accused of creating over three million fake accounts for customers, charging customers for unnecessary car insurance, and hitting customers with unfair mortgage fees.

This also isn’t the first time Wells Fargo has been accused of mistreating employees. There have been reports of employees being forced to work overtime without pay. Others were fired after reporting misconduct on the company’s ethics hotline.

In April, the Department of Labor (DOL) forced the bank to rehire a known whistleblower -- who was fired in 2010 after suspected fraud -- and forced the company to pay him $5.4 million in back pay. In late April, the company was the subject of a government probe following mistreatment of 401(k) retirement accounts.

Just last week, Wells Fargo reported being under fire with the DOL again after facing both complaints and whistleblower actions. The company cites “adverse employment actions” for raising “misconduct issues,” and the DOL will be opening an investigation.

Facing scrutiny from lawmakers

Following the fake-account scandal, Senator Elizabeth Warren, a staunch critic of Wells Fargo, took to Twitter to urge the company to rethink its internal personnel.

“The federal reserve should remove every Wells Fargo board member who served during this scandal. I don’t know what they’re waiting for,” Warren tweeted.

This most recent court ruling comes on the heels of Wells Fargo’s latest attempt to restore faith in their customers and stakeholders with a marketing campaign entitled “Re-Established.”

“Re-Established means recommitting to our customers and team members, reaffirming support of our communities and reinventing how we serve our customers through every interaction in new and improved ways,” said Jamie Moldafsky, Wells Fargo’s chief marketing officer. “It is about holding ourselves to a higher standard and our unwavering commitment to become a better bank.”

Wells Fargo may be the subject of a government probe of how the bank handles 401(k) retirement accounts.

If so, it would follow revelations that the bank signed up millions of customers to accounts without their permission and sold unneeded car insurance to auto loan customers.

The Wall Street Journal reports the U.S. Labor Department is investigating Wells Fargo to determine whether it pushed retirement plan enrollees into more expensive plans. The article maintains that Wells Fargo guided enrollees into funds that the bank managed in a bid to increase its profits.

10-k filing

When asked for comment, Wells Fargo referred the media to its last quarterly Securities and Exchanges Commission 10-k filing, in which it is required to disclose all material factors, including any federal investigations. In a statement to the media, the bank said the 10-k statement reflects its commitment to transparency, even when all details are not yet known.

“We are making significant progress in our work to identify and fix any issues, make things right, and build a better, stronger company," the bank said in a statement.

The 10-k filing does, in fact, make references to a review of its wealth and management business – a response to government inquiries.

Previous issues

In 2016, Wells Fargo faced a tempest when it revealed that employees had opened millions of checking and credit card accounts for customers without their knowledge or consent. The bank made a number of policy changes, including the way it provided performance incentives to employees.

A year later, the bank revealed that it had sold insurance to some auto loan customers without their knowledge. The action reportedly pushed some borrowers into default. The banks also admitted to charging some improper mortgage fees.

Wells Fargo paid a $110 million fine to settle the unauthorized accounts scandal. Published reports suggest it could face a much bigger fine for alleged auto loan and mortgage improprieties.

Wells Fargo could face a mega-fine for the way it conducted its auto loan and mortgage businesses.

The Washington Post quotes two sources close to the settlement negotiations as saying the fine could approach $1 billion, making it by far the largest handed out during the Trump administration.

Two government agencies -- the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency -- have had Wells Fargo under a microscope since it revealed that it had sold insurance to some auto loan customers without their knowledge. The action reportedly pushed some borrowers into default. The banks also admitted to charging some improper mortgage fees.

That, of course, came after the 2016 revelations that the bank had opened checking and credit card accounts for millions of customers without their knowledge or permission. The bank paid more than $100 million to settle those charges.

While eliminating some Obama-era regulations on banks, President Trump has said his administration will act when banks take action that is damaging to consumers.

“Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has been incorrectly reported, but will be pursued and, if anything, substantially increased,” Trump said in a tweet in late 2017. “I will cut Regs but make penalties severe when caught cheating.”

Collateral protection insurance

In 2017, Wells Fargo revealed that more than a half million consumers who financed auto purchases through the bank may have been sold a collateral protection insurance (CPI) without their knowledge or consent.

The bank promised that many of those customers would receive refunds “and other payments” as compensation, in the neighborhood of $80 million.

All auto lenders require borrowers to maintain adequate insurance on the financed vehicle to ensure the lender is repaid if the vehicle is stolen or damaged in a crash. Wells Fargo says its lending agreement allows it to buy a CPI policy from a vendor on the customer’s behalf if there was no evidence — either from the customer or the insurance company — that the customer already had the required insurance.

Wells Fargo says it discontinued the practice in September 2016, about the time the fake accounts scandal broke.

A report by Bloomberg News said Wells Fargo employed a vendor to provide CPI to Wells Fargo auto loan customers, but it did not always verify whether the customers had adequate insurance coverage. As a result, many were sold policies they didn't need.

The nation’s largest teachers union has cut ties with Wells Fargo over the bank’s financial relationship with gunmakers and the National Rifle Association (NRA).

The American Federation of Teachers (AFT) removed the bank from its list of recommended mortgage lenders after attempts to meet with Wells Fargo executives to discuss the matter were met with silence, according to a letter released Thursday.

"Despite our several attempts, by phone and email, to schedule such a meeting, your office's response has been radio silence," AFT President Randi Weingarten said in the letter to Wells Fargo Chief Executive Officer Tim Sloan.

Connection to the NRA

The teachers union had previously requested that Wells Fargo cut lending ties with or impose new restrictions on firearms business partners following the mass shooting that killed 17 people at Marjory Stoneman Douglas High School in Parkland, Fla.

The AFT’s decision to drop the bank came after multiple attempts to engage in a conversation about gun violence with CEO Tim Sloan went unanswered.

“We can only assume that, in light of your silence and the NRA attacks, you have decided that the NRA business is more valuable to you than students and their educators are,” the letter stated.

The AFT has 1.7 million members and channels about 20,000 mortgages to Wells Fargo through its benefit program. The union said it will stop offering mortgages from the bank unless it ends its relationship with the gun business.

Wells Fargo responds

Wells Fargo said it wants schools to be safe, but that elected officials -- not banks -- should decide which products Americans can buy. It added that safety issues should be decided by lawmakers.

Other banks have taken a different stance. Bank of America, Chase, Citigroup, and others have limited their business dealings with gunmakers in light of recent events.

Weingarten said that the AFT has a responsibility to its members and their students who face potential gun violence every day.

“Gun violence is a public health epidemic, and in order to help stop it, we’ll stop the flow of resources to the companies that manufacture these weapons that have caused so much civilian carnage and death,” Weingarten said.

Wells Fargo could face record fines for past financial abuses, according to a published report.

Rueters quotes three sources close to the situation that say the Consumer Financial Protection Bureau (CFPB) is working with the Office of the Comptroller of the Currency (OCC) to levy fines against the bank for abusive actions in the administration of auto insurance and mortgages.

The bank has already paid a huge fine to settle 2016 charges that it enrolled millions of customers in checking and credit card accounts without their knowledge or permission.

According to Reuters, CFPB acting director Mick Mulvaney is considering fines that would approach one billion dollars, making it a record sanction.

Different approach for Mulvaney

It would be the first major CFPB enforcement action under Mulvaney, who has come under criticism from consumer advocates for his approach to policing the financial services industry. Mulvaney has repeatedly criticized the agency he heads, saying it is unaccountable and has too much power. As a member of Congress, he voted to abolish it, calling it a "sick, sad, joke."

The difference in Mulvaney's interest in the Wells Fargo case may be his boss. President Trump has taken to Twitter on several occasions to criticize Wells Fargo for its sales practices.

"Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has incorrectly been reported, but will be pursued and, if anything, substantially increased," Trump tweeted on December 8. "I will cut Regs but make penalties severe when caught cheating!"

Extra mortgage fees

Last September, plaintiffs filed a class action suit against the bank, claiming it bilked home loan borrowers by charging them extra fees when their applications were denied, even when a bank error caused the denial.

The case revolved around rate-lock extension fees -- the fees borrowers pay to "lock in" an interest rate for a specific period of time, usually 30 to 45 days. If it takes longer than that for the loan to be approved, the borrower was charged an extra fee.

A couple of months before that suit, it was revealed more than a half million consumers who financed auto purchases through Wells Fargo may have been sold a collateral protection insurance (CPI) policy without their knowledge or consent.

All auto lenders require borrowers to maintain adequate insurance on the financed vehicle to ensure the lender is repaid if the vehicle is stolen or damaged in a crash. Wells Fargo says its lending agreement allowed it to buy a CPI policy from a vendor on the customer’s behalf if there was no evidence — either from the customer or the insurance company — that the customer already had the required insurance. Wells Fargo says it discontinued the practice in 2016.

Reuters reports all of the parties involved in its report -- Wells Fargo, the CFPB, and the OCC -- declined to comment on the report.

People file for Chapter 7 bankruptcy protection for many reasons, whether because of a major financial setback or a series of smaller ones. The status gives a consumer the opportunity to discharge some debt and get a fresh start.

A bankruptcy carries a number of negative consequences, but it doesn't end a consumer's ability to borrow money; it just adds to the cost.

Online lending marketplace Lending Tree has produced a study that puts a price on bankruptcy when it comes to the extra costs of getting a loan. The findings may prove useful to a consumer contemplating a bankruptcy declaration.

On a credit report for seven years

A bankruptcy will stay on a credit report for seven years. While that initially causes a credit score to plunge, the study found the recovery time is much less than seven years.

The study found that 43 percent of consumers with a bankruptcy on their credit file have a credit score of 640 or higher within a year of the bankruptcy. After two years, 65 percent have a credit score above 640.

A 640 credit score is high enough to qualify for many loans, but it is also low enough to make those loans more costly because of a higher interest rate. However, Lending Tree found those extra costs go down quickly.

For example, an auto loan of $15,000 will cost an extra $2,171 in interest if you apply less than a year after a bankruptcy. If you wait at least two years, the extra charges fall to an average of $799.

The savings, of course, are based on an improving credit score. The authors stress that scores can recover quickly, as long as the consumer pays all bills on time and engages in other sound credit practices.

Mortgages

Even applying for a mortgage with a bankruptcy on the books isn't that costly. The study found that a three-year-old bankruptcy typically results in an interest rate that is only 0.19 percent higher than a borrower without a bankruptcy.

Over the life of the mortgage, that costs $8,887 more than the terms offered to someone without a bankruptcy.

While the costs of bankruptcy may be less than imagined, it is not a legal step to be taken lightly. Getting legal advice is highly recommended. To learn more, check out ConsumerAffairs' resource guide on the subject.

Wells Fargo may not be out of the regulatory woods just yet.

Whistleblowers within the bank's Wealth Advisory Division, called Wells Fargo Advisors, reportedly told regulators about concerns over product and service sales. It follows 2016's unauthorized accounts scandal.

The Wall Street Journal cites bank insiders in its report, who told the newspaper that the division often made decisions with an eye toward compensation rather than what was best for the client.

The Justice Department has requested that Wells Fargo conduct an independent probe into the charges the whistleblowers laid out, and the bank has reportedly retained a law firm to conduct that investigation.

Unauthorized accounts

This isn't Wells Fargo's first brush with potential impropriety. In 2016, the bank revealed that its employees had opened millions of credit card and checking accounts without customers' knowledge or permission.

Wells Fargo, who fired more than 5,000 employees and sent its CEO into early retirement, was accused of encouraging employees to take the unauthorized action by increasing pressure to meet sales goals.

The bank agreed to pay $100 million in fines to settle the charges and another $110 million to settle a class action lawsuit.

Unauthorized auto insurance

Wells Fargo revealed last year that approximately 570,000 consumers who financed auto purchases through the bank may have been sold a collateral protection insurance (CPI) without their knowledge or consent.

Wells Fargo promised those customers would receive refunds “and other payments” as compensation. The bank estimated total remediation would be in the neighborhood of $80 million.

All auto lenders require borrowers to maintain adequate insurance on financed vehicles to ensure the lender is repaid if the vehicle is stolen or damaged in a crash.

Wells Fargo says its lending agreement allows it to buy a CPI policy from a vendor on the customer’s behalf if there was no evidence — either from the customer or the insurance company — that the customer already had the required insurance. Wells Fargo says it discontinued the practice in 2016.

The third party probe of Wells Fargo's Wealth Advisory Division touches on an issue that become a focus of attention in the regulation of the brokerage industry -- whether recommendations sometimes benefit the broker more than the client.

Under the Obama Administration, the Department of Labor drafted a Fiduciary Rule that required financial advisors to always place clients' financial interests above their own. Under the Trump Administration, many of the enforceable provisions of the rule have been postponed until next year.

Cryptocurrency trading has been largely unregulated since it developed as an economic force, but that could be about to change, at least in the U.S.

Key members of Congress say they are open to developing new rules to address the risks that have appeared in a turbulent cryptocurrency market, according to a report by Reuters.

“There’s no question about the fact that there is a need for a regulatory framework,” Sen. Mike Rounds (R-S.D.), a Senate Banking Committee member, told Reuters.

Congress has taken notice over the last 12 months as speculative trading, primarily in Bitcoin, has pushed values to astronomical levels. Bitcoin was valued at around $1,000 a year ago but surged to nearly $20,000 by mid-December.

It has since crashed to Earth, falling below $7,000 early this month, only to rally back to $11,000 over the weekend. Lawmakers and regulators are concerned that unwary investors could lose massive amounts of money if they buy at the wrong time.

International concerns

Internationally, regulators have raised concerns over how cryptocurrencies are being used. They say the digital currency could make it easier to launder money and raise capital to finance terrorist activities.

Political leaders in Germany and France have pushed to place the issue of cryptocurrencies on the agenda at the next G20 meeting.

Earlier this month, the Senate Banking Committee held a hearing on the world of cryptocurrencies and the oversight being provided by the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC). Committee chairman Sen. Mike Crapo (R-Idaho), said there is plenty to be concerned about.

“Much of the recent news about virtual currencies has been negative; between the enforcement actions brought by your agencies, the hack of the international Coincheck exchange, and the concerns raised by various regulators and market participants, there is no shortage of examples that increase investor concerns," Crapo said.

Crypto scams

Last week, the CFTC issued its first "pump and dump" advisory on digital currencies that warned consumers to be wary of schemes that promise huge returns by investing in cryptocurrencies.

"As with many online frauds, this type of scam is not new - it simply deploys an emerging technology to capitalize on public interest in digital assets," said CFTC Director of Public Affairs Erica Elliott Richardson. "Pump-and-dump schemes long pre-date the invention of virtual currencies, and typically conjure the image of penny stock boiler rooms, but customers should know that these frauds have evolved and are prevalent online."

Richardson warned that even experienced investors can become targets of professional con men who are experts at deploying seemingly credible information about investments in an attempt to deceive.

Bank of America is moving customers who previously had easier access to free checking accounts to traditional accounts, which charge a monthly fee if the balance is low.

With “core” checking, customers are required to have a minimum daily balance of $1,500 or a  minimum monthly direct deposit in the amount of $250. Otherwise, they will be charged an additional $12 each month. The charge is described as a “maintenance” fee.

"There are always costs associated with maintaining accounts,” Bank of America spokesman Betty Riess tells Consumer Affairs.

The $250 monthly minimum deposit can come from a consumer’s salary, social security, or pension, but it must be directly deposited, meaning that customers who are paid over $250 regularly via paper checks or cash will still be charged a monthly service fee if their balance falls under $1500 on any given day.

“If you look at our competitors, you will see it is one of the lowest in the industry,” Riess says  of the $250 direct deposit minimum.

Consumers who do not meet the minimum direct deposit requirements must always have at least $1,500 in their account, every single day of the month. “ A customer would need to maintain that amount in the account every day to avoid the fee – assuming they don’t meet other qualifiers,” Riess adds via email.

Low-income customers support old program

Bank of America introduced its free checking program called e-Banking in 2010. It appealed to low-income customers, though the bank’s spokespeople deny that those customers were their market base.  

“E-Banking account was never a ‘free’ checking account, nor was it designed as an account targeting low-balance consumers,” Riess contends.  The program “was designed for tech-savvy customers who wanted to bank on the go.”

The program did technically come with a monthly service fee of $8.95, but that fee was waived if customers agreed to forego paper statements and not visit a teller routinely.  Bank of America stopped offering e-Banking to new customers in 2013 and in the years since has been transferring them over to its “core” checking program.

Riess could not provide data on how many customers had used e-Banking, but one Change.org petition asking for it not to be eliminated has over 50,000 signatures.

“There have been times where I've only had $10 to my name. That wouldn't even cover the maintenance fee,” says one of the several Change.org petitions circulating online. “Bank of America was one of the only brick-and-mortar bank[s] that offered free checking accounts to their customers.”

Bank of America says that students under the age of 24 are “eligible” to have the $12 fee waived, as are customers who join rewards programs.

Riess adds that Bank of America also offers customers a program called Safe Checking that charges a flat $4.95 monthly service fee--but that program does not allow the account holder to write checks.

Some online banking customers at Wells Fargo report the bank made duplicate deductions for payments made online. It apparently was limited to payments designated for automatic bill payment.

NJ.com first reported the problem this week, saying customers were complaining the error had caused their accounts to be overdrawn. Danny, a ConsumerAffairs reader from Williamson, Ga., told us that his Wells Fargo account went in the red by $60,000.

"They made duplicate payments to vendors on all accounts," Danny wrote in a ConsumerAffairs post. "This caused my business and personal accounts to go below zero!"

Error is now fixed

In a statement to the media, Wells Fargo acknowledged the mistake and, in a later Facebook posting, said it has now been corrected.

"There is no action required for impacted customers at this time," the bank said. "Any fees or charges that may have been incurred as a result of this error will be taken care of. We apologize for any inconvenience."

Wells Fargo is taking a drubbing on social media from angry customers. The bank is still recovering from its 2016 scandal in which Wells Fargo employees were found to have created millions of bank and credit card accounts without customers' knowledge.

The world’s financial institutions are sounding the alarm on Bitcoin as one trading site revealed that hackers stole more than $70 million worth of the cryptocurrency. Despite the hack and institutional warnings, Bitcoin’s value is continuing to soar, reaching $17,000 on Thursday.

Bitcoin is purchased and traded through third-party sites that come with their own potential security issues. On Thursday, trading site NiceHash revealed a “security breach” that resulted in hackers stealing 4,700 bitcoins, or nearly $75 million worth of the currency.

“While the full scope of what happened is not yet known, we recommend, as a precaution, that you change your online passwords,” NiceHash wrote on its website. It’s unclear what security measures NiceHash took to protect consumers before the hack; the firm has not yet returned inquiries from ConsumerAffairs.

Lacking proper regulation

Regulators in China and India have both issued strong statements against Bitcoin. “One day you’ll see bitcoin’s dead body float away in front of you,” the People’s Bank of China warned on Sunday.

Financial institutions in the U.S. have been more hesitant in their language but are still voicing their own concerns.

The Futures Industry Association, the lobbying group that represents Wall Street and other international financial institutions, wrote a letter to federal regulators on Thursday saying that the process of trading Bitcoin assets has lacked transparency and proper regulation.

“While we are firm supporters of innovation and competition in markets, we nevertheless believe that such developments have brought to light concerns with the process in which these novel products have come to market,” the association wrote in an open letter to the Commodity Futures Trading Commission.

The “people’s currency"

It’s hardly the first warning from Wall Street. JPMorgan Chase CEO Jamie Dimon famously described Bitcoin as “not a real thing” and “a fraud,” criticisms echoed by other Wall Street billionaires in recent years.

Boosters of the cryptocurrency have countered that banks who sound the alarm on Bitcoin are acting only in self-interest. Bitcoin supporters characterize the banking industry’s concerns as an effort of the establishment to suppress a more democratic currency system.

“Bitcoin, the ‘people’s currency,’ has the potential to become a new currency, free of the control of big governments and big banks,” wrote economics professor and Forbes columnist Panos Mourdoukoutas earlier this year.

How many times have you looked at your bank account at the end of the month and wondered where the money went?

In a new survey, TD Bank tries to answer that question, examining what consumers buy and how they pay for it.

The typical U.S. household earns $62,000 a year and spends, on average, $25,000 of that amount paying the monthly bills and making purchases.

The average household spends around $2,000 on travel and $1,700 on dining. Millennials tend to spend nearly $300 more than the average consumer on restaurants, pushing that total to around $2,000 a year.

Earlier this year Business Insider broke down the costs and found the average consumer spends most of his or her money in three areas -- housing, transportation, and food.

Higher spending level

It also found that consumers spend a lot more than the average TD Bank came up with. Citing the Bureau of Labor Statistics, the report says households spend an average of $56,000 a year.

Housing, transportation, and food claim about 62 percent of that, the report found. To save money, the report suggests consumers try to lower their housing costs, eat more meals at home, and drive a used car or take public transportation.

TD Bank, meanwhile, says its research shows the way consumers pay for their purchases is actually costing them money. Failing to prudently use a rewards credit card and cashing in accrued rewards is leaving money on the table.

The survey found that 46 percent of consumers regularly pay for purchases with a debit or check card and 21 percent pay with cash. That means two-thirds of consumers could be earning generous cash rewards on gasoline, groceries, restaurant meals, and other purchases.

TD Bank says it recently boosted the cash-back rewards on its credit card from two percent to three percent on restaurant charges. It also added grocery purchases as a new rewards category, paying two percent cash-back.

Advice to consumers

"If I could offer advice to consumers who use a credit card, it's to be sensible in spending and mindful about cashing in rewards," says Julie Pukas, head of US Bankcard and Merchant Solutions at TD Bank.

Pukas says consumers need to be smart in the way they use their credit cards for daily purchases like groceries and dining, then have the discipline to pay off the entire balance at the end of each month.

"For those who can make it work, it's a very savvy credit strategy that makes your credit card work for you," she said.

It's one thing to rack up credit card rewards, but they don't help until you cash them in. Nearly one in five consumers with credit card rewards admit there have been times they let them expire.

More millennials have a rewards credit card than any other generation, yet this age group is the one most likely to let their rewards go to waste.

Pukas' advice? Go into your credit card account and automatically apply any rewards to each month's bill, ensuring the rewards get used before they expire.

A survey by mobile banking app Varo Money indicates consumers – led by Millennials – are eager to embrace the simplicity and convenience of remote banking and artificial intelligence (AI) for managing their finances.

Millennials appear especially intrigued with AI's potential to help them budget. Eighty-five percent of Millennials believe AI can help them better manage their finances.

AI, a foundation of the burgeoning field of fintech (financial technologies), is already being used to help consumers devise the best savings plan and provide real-time visibility of spending patterns. Fifty percent of consumers in the survey agreed that an AI assistant would be better than they are at creating a budget.

“Millennials understand how technologies like AI are going to fundamentally change our lives," said Colin Walsh, co-founder and CEO of Varo Money. "We founded Varo for this digitally savvy generation.”

Varo may well be an example of where the future of banking is headed. It's a mobile banking app offering checking, savings, and installment loans, integrated with a number of money management tools.

Traditional banks are adapting

Traditional banks are also adapting to the new technology, and consumers may have seen the evidence with their local banks' movement beyond online banking to mobile account access. Instead of having to make a trip to the bank to deposit a check, consumers can do it electronically using their smartphone.

A recent survey conducted by the American Bankers Association (ABA) found that 60% of consumers said it is important for their bank to offer online and mobile services.

Earlier this month, ABA endorsed a digital lending solution by LendKey (an Authorized Partner) for its member banks. The system provides a digital solution for originating student loans, student loan refinancing, and home improvement loans.

Using LendKey (an Authorized Partner), consumers only need to go to their bank's website or mobile app. There, they can apply for a loan, get credit approval in real time, and pick a loan offer. There's no need to visit a branch.

In use since 2013

ABA said member bank WSFS Bank partnered with LendKey (an Authorized Partner) in 2013, providing a suite of digital solutions to its customers.

“They have successfully helped us accelerate our online student lending and refinance product offerings, while allowing us to maintain control over the credit criteria and keep the loans on our balance sheet,” said Lisa Brubaker, Senior Vice President, WSFS Bank.

The app bears the partner bank's brand and conforms to the bank's own underwriting criteria and standards, giving legacy institutions the ability to compete with the fintech start-ups that have taken the lead in this field.

Rocket Mortgage, SoFi, and Lenda have gained ground as mobile-based lenders. Consumer Reports says Rocket Mortgage (part of Quicken Loans) will speed up the mortgage process, but may be more expensive for borrowers.

Humans preferred for investment advice

While these tools have proved popular with Millennials, other data suggests this generation isn't ready to give up on human interaction completely, especially when it comes to financial advice.

A survey by Lendedu suggests Millennials still prefer to deal with human financial advisors, rather than AI-driven robo-advisors. Just over 46 percent of Millennials in the survey chose working with a financial advisor while nearly 25 percent expressed a preference for robo-advisors like Betterment and Wealthfront.

Robo-advisors provide financial advice or portfolio management online with very little human intervention. They use mathematical rules or algorithms to develop their recommendations.

However, just over half of Millennials said they would hesitate to use a robo-advisor because they think the machines are more likely than a person to make a mistake with their money.

There are a lot of potential causes of financial stress in life. You can lose your job, or you can face huge medical bills due to an accident or injury.

But it seems life's biggest source of financial stress may be avoidable. A survey by personal finance website GoBankingRates.com has found that debt, and the task of paying it off, is consumers' biggest source of financial stress.

Nearly a quarter of the 7,000 consumers in the survey said debt was their biggest financial worry, followed by nearly 20% who said just paying the monthly bills stressed them out. Healthcare, taxes, and housing round out the top five sources of financial stress.

Two main sources of debt

When consumers worry about debt, it's likely from two sources -- student loans and credit card balances. Consumers now owe more than $1 trillion in each category.

Some sources of debt offer some kind of positive trade-off. Mortgage debt puts a roof over your head. Debt on a car loan provides transportation.

Student loan debt should provide the benefit of a better job and career, but many are finding an imbalance between the two, at least in the early years.

Credit card debt can be among the most toxic forms of debt and not a surprising source of stress. In many cases, the debt was used to pay for things you no longer have, such as vacations or basic living expenses.

Getting out of debt

Getting out of debt, despite messages from commercials on late night TV, is never easy. But most financial experts say it can be done if you take a four-pronged approach.

First, conduct an analysis of your credit card debt, noting what you purchased with the debt, the interest rate you are paying, and setting a realistic target for paying it off.

Next, sharpen your pencil and develop a budget. This is never fun, but getting out of debt won't happen unless you either win the lottery (and we're not suggesting you try) or accept some sacrifice.

The money to pay off your debt will either have to come out of your current income, or you will need to increase your income by taking on additional work. These days, nearly everyone has a side hustle, a way to earn extra money. Use that extra money to pay down debt.

Third, ask for help. Don't hesitate to call your credit card company and ask if it can lower your rate, at least temporarily. Another option is to shop for a balance transfer card that charges no interest for an introductory period.

Finally, downsize by selling things you don't really need but that could generate some cash. If a yard sale raises $400, don't spend it -- make an extra $400 payment on your credit card bill.

Besides the blowback from the revelation that another 1.4 million customers may have fallen into the bogus account trap, Wells Fargo is now facing a class action lawsuit that says it bilked home loan borrowers by charging them extra fees when their applications were denied, even when the denail was because of a bank error. 

The case revolves around rate-lock extension fees -- the fees borrowers pay to "lock in" an interest rate for a specific period of time, usually 30 to 45 days. If it takes longer than that for the loan to be approved, the borrower is charged an extra fee.

The plaintiff in the suit, Las Vegas security guard Victor Muniz, alleges that he paid a $287 fee to extend his locked-in rate even though the delays in approval were caused by the bank, according to a Reuters report.

Muniz said the bank hired an appraiser who was out of the country at the time and could not complete the appraisal in the time permitted.

The suit charges that the bank's loan department was chronically understaffed and that many customers had to pay the extension fee because of delays caused by the bank's disarray.

The suit was filed by the Seattle law firm Keller Rohrbeck, the same firm that sued Wells Fargo in 2015 over the creation of bogus accounts, leading the bank to agree to a $142 million settlement. 

By any measure, it's been a rough 11 months for Wells Fargo. And the rough ride may not be over yet.

It was just about a year ago that the bank disclosed that employees had opened checking and credit card accounts in customers' names without their consent, presumably to generate additional fees.

In recent weeks, as the bank has struggled to improve its image on Wall Street, top executives have hesitated to say that all the bad news is out there, and the company can finally move on from the scandal.

Now, Wells Fargo CEO Tim Sloan, in a message to Wells Fargo employees, has warned that the bank's internal review of its operations, conducted by a third party investigative team, could bring about additional unwanted attention.

Expanded review

The review covers an expanded time period -- 2009 through 2016 -- and examined account usage patterns. Sloan said it was instructed to "err on the side of the customer" in determining which accounts are included as "potentially unauthorized."

In a lengthy memo published as a press release, Sloan said the results of the reviews, when they are published in the coming weeks, will probably "generate news headlines," suggesting there may be more questionable activities that have been uncovered. As bad as the news might be, Sloan suggests the report will finally put a cap on the unauthorized accounts scandal.

"We believe our analysis of accounts will be complete," Sloan wrote in the memo. "We are going to spend the next several months issuing refunds and account credits to the customers we have just identified through our completed analysis and processing claims submitted in our class-action settlement. And even after that, we will always welcome any customer who comes to us with a concern."

What Wells Fargo has already done

Sloan also recounted the steps the bank has already taken to make things right for customers. Among them is the elimination of product sales goals, the introduction of new compensation and management programs that reward improving customers' experience, and beefing up oversight and risk control.

Sloan says Wells Fargo has paid out more than $5 million so far in customer remediation and refunds. The bank also reached a $142 million class-action settlement with customers covering retail sales practices and unauthorized accounts dating back to 2002. The settlement will also compensate customers who saw their credit ratings fall as a result of doing business with the bank.

It’s common practice for banks to screen potential customers’ past banking history before enabling them to open a checking account, but one financial institution has run afoul of the Consumer Financial Protection Bureau (CFPB) for not guaranteeing the accuracy of this information.

In an announcement yesterday, the consumer agency alleged that JPMorgan Chase Bank did not have proper procedures in place to guarantee the accuracy of checking account screening reports, which constitutes a violation of the Fair Credit Reporting Act. As a result, consumers were allegedly unable to open accounts and denied information about why they were rejected.

“Information about checking account behavior is used to determine who can open a bank account,” said CFPB Director Richard Cordray. “Because Chase did not have the required processes to report this information accurately, and kept consumers in the dark about reporting disputes and application denials, the Consumer Bureau is imposing a $4.6 million penalty and other measures to stop these violations in the future.”

Consent order

Under the terms of the CFPB’s order, Chase will be required to change its procedures and policies to ensure that consumers’ checking account behavior is accurately reported to consumer reporting companies. The company must also report the results of its investigation to consumers who filed disputes against the bank over the information it sent to consumer reporting companies.

Further, the CFPB stipulates that Chase provide consumers with the contact information of the consumer reporting company that supplied information which Chase used to deny their applications for a deposit account.

The agency says that $4.6 million penalty will be put into the Bureau’s Civil Penalty Fund. More information on the consent order can be found here.

The Democratic members of the Senate Committee on Banking, Housing and Urban Affairs have signed a letter asking the committee chairman to schedule a hearing on Wells Fargo immediately following the August recess.

In a letter to Chairman Mike Crapo (R-Idaho), the Democrats said they have questions for Wells Fargo CEO Timothy Sloan and company chairman Stephen Sanger.

The committee last heard from bank executives a year ago, when it was revealed that bank employees had opened checking and credit card accounts in customers' names, without their knowledge or consent. It was alleged that the purpose was to generate fees for the bank and several thousand Wells Fargo employees were fired in the aftermath.

Last week the bank revealed that more than a half-million auto loan borrowers were sold insurance without their knowledge, and that in some cases it might have led to loan defaults and vehicle repossessions. In their letter, the Democratic lawmakers said it was time for additional questions, alleging new information about the bank's misconduct has emerged since the fake accounts scandal.

Seeking additional information

"Many Committee members have sought additional information from Wells Fargo about these developments, with varying degrees of success," the senators wrote. "A hearing would give members the opportunity to hear directly from the bank's top leadership about these developments."

Among the questions that need answers, the Democratic committee members said they want updates on the bank's efforts to compensate customers harmed in the fake-accounts scandal, and about the unnecessary insurance sales.

Sen. Sherrod Brown (D-Ohio) is the ranking Democrat on the committee. The letter was also signed by Senators Elizabeth Warren (D-Mass.), Jack Reed (D-R.I.), Robert Menendez (D-N.J.), Jon Tester (D-Mt.), Mark R. Warner (D-Va.), Heidi Heitkamp (D-N.D.), Joe Donnelly (D-Ind.), Brian Schatz (D-Hawaii), Chris Van Hollen (D-Md.), and Catherine Cortez Masto (D-Nev.).

Wells Fargo paid a $185 million fine in connection with the unauthorized accounts. In revealing the unauthorized insurance sales last week, the bank estimated total remediation at $80 million.

Meanwhile, the Los Angeles Times reports various New York agencies, including the state insurance regulator, are looking into the latest revelations.

Wells Fargo has revealed that approximately 570,000 consumers who financed auto purchases through the bank may have been sold a collateral protection insurance (CPI) without their knowledge or consent.

Wells Fargo says many of those customers will receive refunds “and other payments” as compensation. The bank estimates total remediation in the neighborhood of $80 million. It said it will begin contacting affected customers next month.

All auto lenders require borrowers to maintain adequate insurance on the financed vehicle to ensure the lender is repaid if the vehicle is stolen or damaged in a crash. Wells Fargo says its lending agreement allows it to buy a CPI policy from a vendor on the customer’s behalf if there was no evidence — either from the customer or the insurance company — that the customer already had the required insurance. Wells Fargo says it discontinued the practice last September.

Policy changed in September

“In the fall of last year, our CEO and our entire leadership team committed to build a better bank and be transparent about those efforts,” said Franklin Codel, head of Wells Fargo Consumer Lending, which includes the Dealer Services unit. “Our actions over the past year show we are acting on this commitment.”

It should be noted that September 2016 is roughly the time that another Wells Fargo practice came to light – the opening of credit card and checking accounts in customers' names without their knowledge or consent. The bank was fined $185 million for that practice.

Bloomberg News cites a consultant's report showing that the vendor responsible for providing CPI to Wells Fargo auto loan customers did not always verify whether the customers had adequate insurance coverage and many were sold policies they didn't need. The bank says those customers will receive about $25 million in refunds.

Repossessed vehicles

Wells Fargo notes that for 20,000 borrowers, the added cost of the CPI may have been responsible for their default on their loans and subsequent repossession of their vehicles. Those consumers, the bank says, will receive additional compensation.

“We take full responsibility for our failure to appropriately manage the CPI program and are extremely sorry for any harm this caused our customers, who expect and deserve better from us,” said Codel. “Upon our discovery, we acted swiftly to discontinue the program and immediately develop a plan to make impacted customers whole.”

Bloomberg notes that the bank's revelation came right after The New York Times reported that it had gotten its hands on a 60-page report from the consulting firm Oliver Morgenson, detailing how CPI was sold to customers.

In the last decade, banks have moved aggressively to encourage their customers to embrace mobile banking. Institutions stressed the ease and convenience of banking with your smartphone.

J.D. Power and Associates, however, has found that not all banking apps are created equal.

The company has released a survey that measures the things that sets one mobile banking app from another. For the most part, it's being intuitive and easy to use. Consumers rate that higher than any other quality.

The survey found that consumers who use mobile banking like it better than just about any other way of dealing with a bank. But despite that, Bob Neuhaus, director of financial services at J.D. Power, says adoption is stubbornly low.

Slow to adopt

"The challenge for both retail banks and credit card companies is to establish accessible entry points that ease resistant customers onto the mobile channel where they will, in all likelihood, quickly find that they are very satisfied with the experience," he said.

The survey identified "lack of trust" as a key reason many consumers have not yet adopted mobile banking. It found just 31% of retail bank customers and 17% of credit card customers are using mobile apps. Fewer than half the people in the survey said they believed their financial data was "very secure."

A previous J.D. Power study found that just 32% of bank customers say they trust mobile banking.

The rankings

Consumers rank Capital One's bank app number one overall, with an 870 score on a 1,000 point scale. It's followed by Bank of America with an 865 score and TD Bank with 860.

Credit card apps were judged separately, with Discover placing highest with a score of 895.

“Anytime our company is recognized by J.D. Power it is a tremendous honor," said Julie Loeger, Discover’s executive vice president and chief marketing officer. "To rank highest in a first-time category is a credit to our loyal cardmembers who continue to engage with Discover through our mobile app.”

Capital One placed second in the credit card app category with a score of 888. Barclaycard was third at 886.

The J.D. Power survey found that even though consumers have been slow to adopt mobile banking apps, younger consumers are more likely to use mobile than their older peers. Seventy-six percent of Millennials and Generation Z have used a mobile banking or credit card app in the last 30 days.

Wells Fargo is "clawing back" $75 million in salary paid to its former CEO and another top executive after a board investigation into the bank's unauthorized accounts scandal.

At least, that was the headline on the report.

But if you look a little deeper into the lengthy document, you learn some interesting things about how the bank operated and what led it to start opening bank and credit card accounts in customers' names, whether they wanted them or not.

The report found the problem centered on Wells Fargo's community bank division, described as having a long history of strong performance as a self-identified sales organization, with a decentralized corporate structure, guided by its Vision & Values statement.

"While there is nothing necessarily pernicious about sales goals, a sales-oriented culture or a decentralized corporate structure, these same cultural and structural characteristics unfortunately coalesced and failed dramatically here," the investigators concluded.

'Run it like you own it'

The report found Wells Fargo gave mangers a strong hand, with a commonly repeated slogan, "run it like you own it." It seems that the managers did just that, and didn't like to have their wisdom questioned once a decision had been made.

The investigators said the community bank division's senior leadership "distorted" the sales model and performance management system, fostering an atmosphere that prompted low quality sales and improper and unethical behavior.

The report says community bank senior leaders set "increasingly high and unrealistic" sales goals, and were reportedly challenged on it by regional managers. Despite that, the goals got even higher, and so did firings and resignations when the goals could not be met. At the same time, the report found that the quality of the new accounts continued to decline.

Misguided effort

At some point Wells Fargo realized there could be a problem and began to take steps to address it. But the investigators maintain that the steps were misguided and ineffective. They fired the offending employees without considering the underlying causes.

In a particularly damning statement, the investigators said Carrie Tolstedt, head of the community bank division, and her senior staff "paid insufficient regard to the substantial risk to Wells Fargo’s brand and reputation from improper and unethical sales practices," even as they overlooked financial or other harm to customers.

Then, a flawed sales model got even more flawed. The report says supervisors placed intense pressure on employees to increase sales, even to the point of calling them several times each day to demand a progress report.

Pressure to sell unnecessary products

"Certain managers also explicitly encouraged their subordinates to sell unnecessary products to their customers in an effort to meet the Community Bank’s sales goals," the authors write.

The report goes on to document what has been widely reported here and elsewhere -- that over the years Wells Fargo created millions of accounts for customers who never authorized them.

It also outlines remedial steps to make sure it doesn't happen again. The community bank division at Wells Fargo is now highly centralized -- not decentralized as it was in the past. Supervisors don't run it like they own it.

Now, when an account is opened, an automated email is sent to the customer to confirm the account was properly authorized.

Some of the major banks have proposed changes to Dodd-Frank financial reform rules governing the way consumers access their financial information.

Personal Capital, a firm providing financial asset tracking tools, charges the bank-supported changes would restrict customer access to their data and weaken banking cybersecurity.

It made its comments to the Consumer Financial Protection Bureau (CFPB), noting that Section 1033 of Dodd-Frank requires banks and brokers to provide customer access to financial information.

In a press release, Personal Capital claims J.P. Morgan, Wells Fargo and major banks have offered up changes to that section that it says would make it harder for customers to access their data.

Bank concerns

Bank officials have stated that customers are allowing third party companies -- such as Personal Capital -- to have access to their accounts. In an annual letter to shareholders, J.P. Morgan CEO Jamie Dimon said it is an area of concern, and that the bank is currently working with third parties on more secure ways to share data.

Bill Harris, CEO of Personal Capital, worries that the changes the banks are proposing would reduce customer access to their information and weaken security.

"The existing ecosystem of data aggregation operates at huge scale with high security connecting 14,000 financial institutions with tens of millions of consumers," Harris said. "It isn't broken. Let's be careful not to break it."

Question of who gets to decide

Harris says the banks want to change cybersecurity protocol in a way that puts banks in the position of deciding who gets access to what information. He argues that it should remain with the customer to decide.

"Malware and phishing are constant security hazards for consumers. The most vulnerable moment for a hacker to steal your password is when you type it into your own browser," said Fritz Robbins, Chief Technology Officer at Personal Capital.

Robbins says using data aggregation services reduces the need to enter log-in information, arguing that it enhances security.

Personal Capital has posted its entire comments to the CFPB here.

Next week, if you need to withdraw money from a Wells Fargo ATM, you won't need your debit card. You can use your smartphone.

The bank ran a pilot program on the technology in several areas of the country and is now ready to roll it out nationwide. To use the new system, Wells Fargo customers who have the bank's mobile app will be able to request a code that they will enter, along with their PIN.

In an interview with Reuters, Jonathan Velline, Wells Fargo's head of ATM and branch banking, said the new system enhances safeguards against fraud.

"Security certainly was a big aspect of the cardless feature and the two-step identification helps reduce the risk of fraud," Velline told the wire service.

The ATMs will still take debit cards, but Velline says the digital access prevents thieves from installing skimmers that intercept and steal data from the inserted cards.

Repairing customer relations

The new system is being introduced as Wells Fargo continues its mission to repair relations with customers in the wake of last year's unauthorized accounts scandal. The bank got a black eye when it was revealed thousands of employees had opened checking and credit card accounts for customers without their permission, in a bid to increase fees.

In Orlando this week, Wells Fargo CEO Tim Sloan hosted a company-wide town hall meeting to inform employees about efforts to win back trust.

“We’re making things right for our customers and our team members," Sloan said. "We are fixing problems, and we’re building a better bank for the future.”

New ad campaign

Employees also got a sneak peak at a new national advertising campaign with the theme “Building Better Every Day.” The advertising campaign will begin in mid-April across multiple channels.

Business Insider reports the bank has faced strong headwinds as it tries to reassure consumers, experiencing a pronounced decline in new accounts and an increase in closed accounts since the scandal broke last fall.

Citing company data, the publication notes that new checking accounts dropped 43% and new credit card accounts fell by 55% in February.

If one of your New Year's resolutions is to get ahead financially in 2017, maybe you should think about relocating. Part of your struggle may have to do with where you live.

For example, if you live in New Jersey, Maryland, Massachusetts, Hawaii, or California, you could be barely making ends meet. A survey by GoBankingRates.com has identified the states where consumers are most likely and least likely to be living paycheck to paycheck. The island paradise of Hawaii tops the list.

On the other hand, you may be doing just fine if you happen to live in Michigan, Mississippi, or Oklahoma. It's not so much a matter of how much you earn in those states, but how much you have to spend.

The report's authors took into account a state's median income, then subtracted the average housing costs, food expenditures, transportation costs, utilities, and healthcare.

'Live like royalty on $60,000'

It turns out there are also some specific cities where your money will take you farther. CNBC recently chose 15 American cities where earning $60,000 “would allow you to live like royalty.” That might be overstating it a bit, but the numbers are indeed impressive.

For example, the cost of living in Detroit is about half the national average. The median base salary is $61,000 while the median home value is $123,000.

Other inexpensive cities include Memphis, Pittsburgh, and Cleveland. There are plenty of jobs and the median home value is less than $126,000.

Most major cities absent

Though Detroit, Cleveland, Houston, and Atlanta are on the list of most affordable cities, most other major cities are missing. The main reason is the cost of living. For example, you certainly won't find any California metros included among the locales where $60,000 will make you feel affluent.

There are no Colorado cities on the list either. It's no surprise since a new report on employment and income shows 25% of Colorado residents lack enough money to meet basic needs. An astounding 294,000 Coloradans were found to be living in “deep poverty.”

The report by the Colorado Center on Law and Policy, a nonprofit, non-partisan research and advocacy organization, found low wages in comparison to the cost of living and high levels of unemployment and underemployment.

When federal regulators discovered last fall that Wells Fargo had been creating credit card and checking accounts for its customers without their permission, simply to boost its fees, regulators punished the bank with millions of dollars in fines.

But it turns out consumers have also been punishing the bank.

When Wells Fargo reported its earnings for the latest quarter and full year, it disclosed that new credit card accounts plunged 43% year-over-year and dropped 7% from the previous month.

As for bank accounts, new checking accounts plunged 40% from December 2015. However, they were up slightly from November.

But that bit of good news was overshadowed by the revelation that some current Wells Fargo checking account customers simply stopped using their accounts without closing them. Between November and December, active checking account customers fell by 100,000.

5,300 bank employees fired

Back in September, Wells Fargo reached a settlement with federal agencies and the City of Los Angeles over revelations it had opened millions of accounts without customers' knowledge or permission. In settling with government agencies, Wells Fargo announced that it had fired 5,300 employees and changed sales practices to end incentives to open new accounts.

Regulators charged that, not only was it fraudulent to move money and open accounts without a customer's permission, the customer also incurred fees in the process, costing him or her money.

In the earnings report Friday, Wells Fargo CEO Tim Sloan said the bank is working to regain the trust of consumers, employees and other key stakeholders.

“I am pleased with the progress we have made in customer remediation, the ongoing review of sales practices across the company and fulfilling our regulatory requirements for sales practices matters,” Sloan said. “As planned, we launched our new retail bank compensation program this month, which is based on building lifelong relationships with our customers.”

It should be noted that not everyone is punishing Wells Fargo. Even after reporting its earnings, which fell short of analysts' estimates, the company's stock rose on Wall Street. CNBC reported investors are looking past the bad news and are convinced the bank's profits will still rise in the future.

Wells Fargo faces dozens of lawsuits from angry customers over its fake accounts scandal, but it is reportedly seeking to push those disputes into arbitration.

Bloomberg News reports the bank has filed a motion in U.S. District Court in Salt Lake City to keep one particular lawsuit from getting to court. In the motion, Wells Fargo says customers agreed to resolve disputes out of court when they opened their accounts.

The lawsuits are the result of Wells Fargo's actions, opening millions of bank and credit card accounts in customers' names without their knowledge or permission. At the time, the bank was engaged in a sales strategy known as “cross-marketing,” where customers with one type of account were encouraged to open another type, increasing the amount of fees flowing to the bank.

Went beyond convincing

The bank offered incentives to employees who were able to convince customers with bank accounts to open credit card accounts, and vice-versa. Federal regulators charged Wells Fargo went beyond trying to convince customers to open new accounts and simply opened the accounts for them without their knowledge. The bank fired 5,300 employees and paid $185 million in fines. It's CEO, John Stumpf, after being raked over the coals by Congressional committees, took early retirement.

Bloomberg reports the motion, filed in the lawsuit brought by 80 Wells Fargo customers, points out that the arbitration clause has already been validated in another lawsuit brought in California.

Arbitration is a form of dispute resolution favored by large corporations with lots of customers. It keeps disputes out of court and, while saving in legal fees, often results in more favorable rulings. Besides banks, telecommunications companies usually require their customers to agree to arbitration.

Considering a ban

A year ago, the Consumer Financial Protection Bureau (CFPB) said it was considering proposed rules that would ban consumer financial companies from using “free pass” arbitration clauses.

With this free pass, CFPB said companies can sidestep the legal system, avoid big refunds, and continue to pursue profitable practices that may violate the law and harm countless consumers.

“Consumers should not be asked to sign away their legal rights when they open a bank account or credit card,” CFPB Director Richard Cordray said at the time.

Cordray said corporations are using the arbitration clause as a free pass to sidestep the courts and his agency would consider banning arbitration clauses that block group lawsuits.

A federal regulator has revoked its earlier position and will increase its oversight of Wells Fargo, adding to the fallout from the bank's fake accounts scandal.

The Office of Comptroller of the Currency (OCC) issued a brief statement, saying the bank must now get OCC approval for any changes to its board of directors and senior leadership. Specifically, the OCC said it must approve any senior executive severance packages, known in the business as “golden parachutes.”

In early September, Wells Fargo agreed to pay a $100 million fine for secretly opening checking and credit card accounts in customers' names without their knowledge. Federal regulators who brought the enforcement action claimed the bank did that so it could meet its sales quota for new accounts.

The Consumer Financial Protection Bureau (CFPB) said the bank employees, under pressure to meet targets and earn sales incentives, opened more than two million unauthorized deposit and credit card accounts.

Largest CFPB fine ever

“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” CFPB Director Richard Cordray said at the time. “Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed.”

The bank responded by firing 5,300 employees it said were responsible for the fake accounts, but lawmakers and regulators began looking more closely at the executive suite.

The heat fell squarely on Wells Fargo CEO John Stumpf, who was hauled before several Congressional committees to endure tongue lashings from a number of outraged lawmakers. Stumpf eventually announced his early retirement in an effort to quell the furor. The OCC announcement suggests the furor still has room to run.

Meanwhile, business at Wells Fargo has fallen dramatically. Fortune reported late last week that new accounting openings “fell off a cliff” in October. Checking account openings were down 44% from October 2015. New credit card accounts were down 50%. New CEO Tim Sloan said the decline in new accounts was expected.

The revelation that Wells Fargo had phonied up checking and credit card accounts for customers, in a bid to inflate sales numbers, was bad enough. It cost the bank $185 million in state and federal fines, but that hasn't been the end of it.

The bank is now facing lawsuits because of the scandal, which prompted CEO John Stumpf to retire. And one of the bank's biggest critics in Washington, Sen. Elizabeth Warren (D-MA), has pressed for additional changes in the executive suite.

Now comes word that Wells Fargo has agreed to settle a lawsuit brought by plaintiffs who charge the bank financially exploited consumers who were losing their homes in the aftermath of the financial crisis.

$50 million settlement

Reuters reports that Wells Fargo has agreed to pay $50 million to settle a suit that charged the bank made an excessive profit on third party appraisals of homes that defaulting homeowners were required to pay.

Most mortgage agreements contain language allowing a lender to charge the homeowner for the cost of an appraisal if he or she defaults. The appraisal tells the lender what the property is now worth.

The suit claimed Wells Fargo significantly marked up the cost of the appraisals, sometimes charging the consumer more than double what the bank paid. Reuters quotes a spokesman for the bank as saying it did nothing improper but agreed to the settlement to put the matter to rest.

Playing Whack A Mole

But Wells Fargo might feel like it's playing Whack A Mole at this point, as another lawsuit pops up as one is settled. A law firm is now trying to find consumers for a proposed class action settlement with the bank for alleged robocalls.

Greenwald Davidson Radbil PLLC issued a press release last month seeking consumers who had received texts or calls on cell phones from the bank without permission. The lawsuit claimed Wells Fargo used an automatic telephone dialing system to make or initiate calls in connection with overdrafts of deposit accounts. Wells Fargo said it did not break the law and did nothing wrong.

With direct deposit, ATMs everywhere, and the ability to deposit that birthday check from your grandmother with your mobile phone, do you really need to go to a bank? You know, one with an actual building, with people working in it?

Maybe not. A report by Business Insider notes that Citigroup, JPMorgan, and Bank of America have closed 389 branches since the third quarter of last year.

Many of the closings coincided with the aftermath of the 2008 financial crisis, but many others are a direct result of the transition to electronic – primarily mobile – banking.

Business Insider cites Bank of America's third quarter earnings report as showing a significant increase in mobile banking, which executives said benefits both consumers and shareholders.

The American Bankers Association (ABA) released a survey last month that showed most consumers use mobile banking at least once a month, and that 75% rate their bank's app as either “excellent” or “very good.”

Importance of a good app

Nessa Feddis, ABA’s senior vice president and deputy chief counsel for consumer protection and payments, says consumers increasingly are using mobile devices to manage everyday finances.

“Bank innovation has made it more convenient and safer than ever to do things like check your balance, deposit a check or make payments,” she said.

In the past, convenient branches and friendly services might have been key to getting and retaining customers. Today, Feddis says banks have to have user-friendly, secure apps to compete.

But there are exceptions to the trend. In a report issued in the last decade entitled “Digital Divide,” the Independent Community Bankers Association found a number of community banks were slow to adopt some aspects of electronic banking – notably online bill pay.

The report found many community bank customers were using online bill pay where it was available, but these same customers were also writing checks and using other traditional banking services.

“Supporting all of these payment and service delivery channels is costly for community banks,” the authors wrote. “As a result, many community banks are taking a pass on offering online bill payment, labeling it as an unnecessary loss-leader service.”

Big city - smalll town difference

The report found community banks in larger markets were much more likely than those in small towns to rely on online and mobile banking.

The larger questions is whether they will continue to operate branches in the same number. Banks in small towns will most likely be the last to shutter their brick-and-mortar locations.

But in a speech earlier this year, former Barclays CEO Anthony Jenkins predicted the industry as a whole would cut jobs and branches as much as 50% over the next 10 years.

The enormity of what Wells Fargo did to many of its customers appears to be sinking in, and anger is building.

Wells Fargo CEO John Stumph was back on Capitol Hill Thursday, facing lawmakers who, if anything, are angrier now than they were the week before when Stumph appeared before them to try to explain how thousands of bank employees opened accounts in customers' names, without their knowledge, just so the employees could hit their sales goals.

It may be too soon to know if the scandal will cause huge numbers of current Wells Fargo customers to look for another bank, but the scandal has already caused the state of California to do so.

“Wells Fargo’s fleecing of its customers by opening fraudulent accounts for the purpose of extracting millions in illegal fees demonstrates, at best, a reckless lack of institutional control and, at worst, a culture which actively promotes wanton greed,” said California Treasurer John Chiang, in a statement.

Losing California's business

Because of the bank's actions, Chaing announced the state will suspend its financial ties with the San Francisco-based financial institution. That means no investments by the Treasurer's Office in Wells Fargo securities.

It also means the state will stop using Wells Fargo brokerage services and will drop the bank as a managing underwriter on state bond sales. The sanctions will remain in place for at least 12 months.

That's likely to get Wells Fargo's attention, since the state Treasurer controls nearly $2 trillion in annual banking transactions, manages billions of dollars in investments, and is the largest issuer of municipal bonds in the U.S.

In a letter to Wells Fargo, Chaing said he is trying to help the bank understand that “integrity and trust matter.”

Warren not letting up

In Washington, the scandal seems to have united a divided Congress in its condemnation of Wells Fargo. Sen. Elizabeth Warren (D-MA) has been the most vocal and most scathing, however, particularly when she confronted Stumph at a Senate Banking Committee hearing.

“You haven’t resigned. You haven’t returned a single nickel of your personal earnings,” she said. “You haven’t fired a single senior executive. Instead, your definition of ‘accountable’ is to push the blame to your low-level employees who don’t have money for a fancy PR firm to defend themselves. It’s gutless leadership.”

Warren says the bank “squeezed employees to the breaking point” in an effort to drive up the price of its stock. Some present and former bank employees, meanwhile, have sued Wells Fargo, claiming they were the biggest victims of the scandal.

Meanwhile, Warren and seven other members of the Senate have sent a letter to the Department of Labor, requesting it investigate Wells Fargo for potential violations of wage and hour laws as it pushed employees to hit sales targets.

It hasn’t been a good month for Wells Fargo. The company found itself in the middle of a scandal after reports revealed that its employees engaged in fraudulent behavior by opening customer accounts without consent.

The actions resulted in multiple lawsuits, including $185 million in fines from federal regulators, the Office of the Comptroller, and the City and County of Los Angeles. It is also likely that the company will face a probe from the FBI and federal prosecutors.

Now, the company’s board has decided to penalize CEO John Stumpf by forcing him to forfeit $41 million from his compensation package. He will also not receive any bonuses for 2016 and will forgo his salary while the company performs its own internal investigation into the company’s banking sales practices. Carrie Tolstedt, the former head of retail banking, will also be denied $19 million.

“We are deeply concerned by these matters, and we are committed to ensuring that all aspects of the company’s business are conducted with integrity, transparency, and oversight,” said Stephen Sanger, lead independent director for the board, in a statement. “We will conduct this investigation with the diligence it deserves — and will follow the facts wherever they lead.”

The Wells Fargo board could potentially take further action against Stumpf, Tolstedt, and other executives depending on what they find. The members have stated that Stumpf will recuse himself of all board-related deliberations related to the investigation.

“We will proceed with a sense of urgency but will take the time we need to conduct a thorough investigation,” Sanger said. “We will then take all appropriate actions to reinforce the right culture and ensure that lessons are learned, misconduct is addressed, and systems and processes are improved so there can be no repetition of similar conduct.”

Lawmakers remain unsatisfied

While the actions taken by the company may seem to be a start in the right direction, lawmakers say that there is much that should be done. They point out that while 5,300 employees were fired as a result of the scandal, company executives seem to have come out pretty well.

Earlier this month, CNN reported that after Tolstedt retires at the end of the year, she will be able to rake in $124 million in shares, options, and restricted stock. Sen. Elizabeth Warren has stated her disgust that low-level employees are the ones taking the blame for the scandal.

“You haven’t resigned, you haven’t returned a single nickel of personal earnings, you haven’t fired a single senior executive,” Warren said during the Senate hearing. “Your definition of accountable is to push the blame to your low level employees… it’s gutless leadership.”

“[Wells Fargo’s] announcement is a step in the right direction but there are still dozens of unanswered questions,” added Ohio Sen. Sherrod Brown in a statement.

Wells Fargo has agreed to settle a West Virginia lawsuit that dates all the way back to 2005. The company will pay $8 million to settle allegations made against Acordia, an insurance broker that was acquired by Wells Fargo in 2001.

The suit was originally filed by then-West Virginia Attorney General Darrell McGraw; it charged Acordia with favoring certain insurance carriers over others to the detriment of consumers. The lawsuit stated consumers were directed towards choosing these carriers “regardless of whether the insurers provided the best cost, coverage and financial security for the client,” according to Business Insurance report.

Before the lawsuit was filed in 2005, the Attorney General’s office launched a probe to gather information and evidence of any wrong-doing.

According to the Charleston Gazette-Mail, investigators found that brokers and insurance companies had made arrangements for secret “contingent commissions,” wherein the insurance carriers would pay extra money to brokers in order to have clients directed towards their companies; these secret commissions allegedly earned brokers millions in extra fees.

$8 million settlement

Wells Fargo denies any wrong-doing in connection to this case, but has agreed to pay $8 million to the Office of the Attorney General on the state’s behalf.

Current West Virginia Attorney General Patrick Morrisey announced the settlement on Monday, citing it has a victory for citizens of West Virginia.

“I take very seriously my office’s obligation to protect citizens from questionable marketing practices,” he said. “This settlement is yet another example demonstrating that commitment.”

A copy of the settlement can be viewed here.

If you’ve ever called a customer service line, then you may be all too familiar with the initial spiel or automated message that you hear before talking to a human: “This call may be recorded for quality assurance purposes.”

While companies certainly do use these recordings for training purposes, the statement is also important because it provides a warning for consumers. Wells Fargo may be learning that lesson the hard way. The company has been fined $8.5 million for violating California’s state law which requires that all companies disclose that a call is being recorded.

The suit was filed back in February when the state accused Wells Fargo of violating sections 632 and 632.7 of its penal code. The lion’s share of the $8.5 million will be split up amongst five California counties, with $7.6 million going to Los Angeles, Riverside, Venture, Alameda, and San Diego. Wells Fargo will also pay $250,000 to two organizations – the Privacy Rights Clearinghouse and the Consumer Protection Prosecution Trust Fund.

Victory for consumer privacy

The state considers the suit a victory for consumer privacy, saying that it is more important than ever that consumers feel safe in an increasingly technological world.

“This settlement holds Wells Fargo accountable for violating the privacy of its customers by recording calls without providing adequate notification, and ensures that the bank makes the changes necessary to protect the privacy of its customers,” said California Attorney General Kamala Harris.

In addition to the payment, Wells Fargo has stated that it will create an internal compliance program so that calls are no longer recorded without consent. 

The city of Los Angeles has filed suit against Wells Fargo Bank, alleging that the bank's policies and high-pressure sales quotas encouraged employees to engage in “unfair, unlawful and fraudulent conduct” against customers.

L.A. Prosecutor Mike Feuer filed the suit in state court on Monday, alleging that, among other things, employees would misuse customers' confidential information, open accounts in customers' names without authorization, often failed to close those accounts when the customers demanded it, and sometimes even took money out of authorized client accounts to pay for those unauthorized fees.

“The result is that Wells Fargo has generated a virtual fee-generating machine, through which its customers are harmed, its employees take the blame, and Wells Fargo reaps the profit,” the lawsuit says.

Furthermore, “On the rare occasions when Wells Fargo did take action against its employees for unethical sales conduct, Wells Fargo further victimized its customers by failing to inform them of the breaches, refund fees they were owed, or otherwise remedy the injuries that Wells Fargo and its bankers have caused.”

Gaming

The lawsuit also claims that Wells Fargo bankers engaged in a practice known as “gaming” -- opening unauthorized accounts in customers' names, making unauthorized withdrawals from customers' authorized accounts to pay the fees on the unauthorized ones, and reporting customers to collections and/or posting “derogatory information” in the customers' credit reports.

Wells Fargo responded with a statement saying it would fight those allegations in court, and that “Wells Fargo's culture is focused on the best interests of its customers and creating a supportive, caring and ethical environment for our team members. This includes training, audits and processes that work together to support our Vision & Values and our commitment to customers receiving only the products and services they need and will benefit from.”

Yet many consumers — from all over the country, not just California — have written reviews that sound remarkably similar to some of the allegations mentioned in Feuer's lawsuit. Consider this sampling of complaints we got about Wells Fargo, just during the month of April 2015. Dan from Bozeman, Montana wrote us on April 1 to say:

Over the past several years, I have become more and more frustrated with Wells Fargo as a whole. I have kept my personal and business bank accounts with Wells Fargo and just about every month they find a way to charge some kind of fee for some random reason. Their accounts are set up with such complex sets of terms and conditions that you cannot possibly keep track of all of them. If you don't watch your accounts daily - you can be assured they will be siphoning money. The bankers will always assure you that your accounts are free.. just know that they are not.

"Misled in the beginning"

Tawnya from Alexandria, Alabama went into more detail about those fees. She visited her local Wells Fargo branch seeking “ANOTHER temporary check card since the company failed to send me the new card, although I did receive an email [assuring me] it was sent out.” While she spoke to one employee about her check-card problems, another one overheard her mention that she had an at-home business, and encouraged her to open a business savings account.

He quickly went over the benefits and had me transfer $150 from my checking on that day, explaining to me $150 must be deposited into the business savings monthly. He did not specify it had to be an automatic transfer set up for a specific date.... [the following month] I made a deposit of $150 in the Lenlock, AL branch and no worries, until I see they took out a $14 service charge from my business checking and $6 from my business savings. As I looked further, there was another $6 charge to my business savings in Feb. … Not only was I charged a $5 service fee for years to have a checking account after the Wachovia/Wells Fargo takeover, but now I am getting service fees for trying to build a business when I was mislead in the beginning by the representative ….

John from Chicago said that “Wells Fargo small business account reps gave me a personal credit card I did not ask for and charged me fees for that.”

But Octavia from New Jersey offered a view from the employees' side of the table:

.... [O]ur finances hit the toilet when my husband switched jobs and began working for Wells. The amount of stress and pressure that he had to endure to sell and open accounts was too much for him. ... My husband has since left but reiterates that it is the worst to its customers and employees alike!

Everyone denies having quotas. The police insist they don't but ask yourself how often you've gotten tickets late in the month. Telephone solicitors say they don't have quotas but how often have you been signed up for something you never heard of?

David E. Douglas says Wells Fargo Bank is up to the same shenanigans. In a lawsuit in Los Angeles County Superior Court, Douglas charges that employees of three different Wells Fargo branches opened new accounts in his name and his business' name without his knowledge.

Douglas says branch employees are under so much pressure to sign up new customers that they use the information they already have on existing customers to open phony new accounts. Douglas claims the individual defendants opened at least eight accounts in his name and forged his signature on the applications without his knowledge, Courthouse News Service reported.

Given the demands Wells Fargo makes on its employees, it "should have known that its employees and bank managers routinely use the account information, date of birth, and Social Security and taxpayer identification numbers of defendant Wells Fargo's existing bank customers to use the existing bank customers' money to open additional accounts in the existing customers' names without their knowledge or consent and by forging the signature of their existing customers without their knowledge or consent to open said additional accounts, including purported business accounts for businesses that do not exist," Douglas' suit charges.

Even after being alerted to the issue, Wells Fargo did nothing, Douglas alleges. He says in the suit that when he found out about the unauthorized accounts, he contacted a fraud investigator at the bank's Beverly Hills branch. She assured him that Wells Fargo would "conduct a thorough investigation and make him whole," but he never heard back from her or anyone else at the bank, so he was forced to sue, Douglas says in the complaint.

The Internet continues to become mobile, meaning in the future even more consumers will use their smartphones and tablets for online banking. Most banks have already rolled out mobile apps and are encouraging customers to use them.

But how secure are they? A new report from Reportlinker.com suggests mobile banking is fairly secure for now. Its Mobile Banking Security Insight Report suggests the financial services industry will continue to benefit from the immediacy that smart mobile devices (SMDs) offer but there are significant risks that must be counteracted before consumers are confident in accepting them.

Banks like mobile banking because it's good business. Mobile customers are generally young and affluent. In other words, the same people who want the latest gadgets – smartphones and tablets – are the very people the banks want as customers.

Risks

But what are the risks?

“Anyone who has access to your cell phone has access to your identity in a few clicks,” said Elizabeth Baker, an assistant professor at Wake Forest University and an expert in information system security issues. “Often, credit card companies limit your financial responsibility if your card is stolen and fraud is committed. This is not true for your checking and savings bank accounts. Money fraudulently withdrawn can be costly.”

The new report acknowledges this growing risk. It notes that while the current level of risk is probably still lower than using online banking on your PC, criminals are quickly turning their attention to the mobile platform as more consumers start using mobile devices.

“As the mobile device becomes the number one screen for our daily lives it conversely becomes an increased target for malicious activity,” the report finds. “Mobile devices are increasingly being attacked.”

Potential

But the report, compiled by Goode Intelligence, says the mobile banking platform has the potential to be much more secure than your desktop. That's because it can also be used as a security token.

If a consumer registers a specific phone to the bank account the authentication process can be simplified for the user who merely has to enter a private PIN or passcode to prove they are in possession of the registered phone.

At the same time, the report says smart phones have the potential to offer stronger authentication. Geolocation, voice recognition, built-in cameras and fingerprint readers could all be used, if required, to offer additional layers of security when authenticating users.

Seamless security

The report suggests this could all be done seamlessly, so that mobile banking is both secure and convenient for the consumer.

Most importantly, all these extra measures could be added without spoiling the user experience. It means that mobile banking can offer better security and better user convenience at the same time.

To reach that level of security, however, it says banks should create an encrypted communication channel between user and bank. It should then create a security protocol that only allows the registered phone to access the account and ensures that the person using the phone is the registered customer.

That security layer is currently lacking. Experts like Baker worry that smartphone users currently are not taking enough steps to secure their phones with password protections, in the event they are lost or stolen.

The Justice Department has sued Wells Fargo, the nation's largest mortgage lender, accusing it of "reckless" lending and sticking the Federal Housing Administration (FHA) with the tab for loans that went bad.

Prosecutors say they are seeking "hundreds of millions of dollars" in damages on behalf of the FHA.  The complaint, filed in New York City, alleges that for more than a decade, Wells Fargo engaged in "reckless" underwriting of government-backed loans.

“As the complaint alleges, yet another major bank has engaged in a longstanding and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance," Manhattan U.S. Attorney Preet Bharara said. "As also alleged, Wells Fargo’s bonus incentive plan – rewarding employees based on the sheer number of loans approved – was an accelerant to a fire already burning, as quality repeatedly took a back seat to quantity.

"What’s more, even after concerns were raised internally at the bank, Wells Fargo began self-reporting bad loans in a significant way, as required, only after this Office issued a subpoena last year. Now a jury will have to weigh the facts to determine the bank’s liability and the scope of the damages it must pay,” Bharara said. 

At issue are more than 100,000 FHA-backed loans. Wells Fargo said the loans met federal lending guidelines when half of them didn't, the government alleges.

“As the complaint alleges, yet another major bank has engaged in a longstanding and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance,” U.S. Attorney Preet Bharara said in a prepared statement.

The Justice Department's case is similar to those filed earlier against Citigroup, Deutsche Bank and other lenders. Deutsche Bank has agreed to pay $202 million and Citigroup is paying $290 million. A suit against Allied Home Mortgage is still pending. Bank of America has said it reached an agreement to resolve claims for FHA-insured loans made by Countrywide Mortgage.

In July, Wells Fargo paid $125 million and set up a $50 million assistance fund to settle federal allegations that it discriminated against minority borrowers.

The online video that insults the prophet Muhammad has sparked a crisis in the Middle East and isn't doing much to make life easier for banking customers in the U.S. either.

Cyber attacks blocked Wells Fargo's site in much of the country today and U.S. Bancorp and PNC are said to be next on the list.  Bank of America, Citigroup and JPMorgan Chase were all hit earlier. 

The disruptions were caused by what are known as denial of service attacks, in which massive numbers of computers hit sites simultaneously, flooding them with requests that cause the sites to either go down or operate at a crawl.

A group calling itself the Izz al-Din al-Qassam Cyber Fighters has claimed responsibility for the attacks and says they will continue until that controversial video is taken down.

The Wells Fargo site was completely unreachable for much of today, creating cries of anguish and outrage from many of its 21 million online customers.

Many customers have blamed the banks for the attacks, although experts say there is little that anyone can do to defend against massive distributed denial of service (DDOS) attacks, so called because they use thousands of computers all around the world to mount simultaneous attacks that overwhelm not just the targeted sites but, in many cases, other sites hosted within the same data centers.

Wells Fargo issued a statement apologizing for the outage. 

"We are working to quickly resolve this issue. Customers can still access their accounts through our ATMs, stores and by phone," the bank said in a statement.

The second largest fair lending settlement in Department of Justice history has been filed, resolving allegations that Wells Fargo Bank engaged in a pattern or practice of discrimination against qualified black and Hispanic borrowers in its mortgage lending from 2004 through 2009.  

The settlement provides $125 million in compensation for wholesale borrowers who were steered into subprime mortgages or who paid higher fees and rates than white borrowers because of their race or national origin. 

Wells Fargo, the largest residential home mortgage originator in the United States, will also provide $50 million in direct down payment assistance to borrowers in communities around the country where the department identified large numbers of discrimination victims and which were hard hit by the housing crisis.  

Additionally, the bank has agreed to conduct an internal review of its retail mortgage lending and will compensate African-American and Hispanic retail borrowers who were placed into subprime loans when similarly qualified white retail borrowers received prime loans.   

Compensation paid to any retail borrowers identified in the review process will be in addition to the $125 million to compensate wholesale borrowers who were victims of discrimination. 

“The department’s action makes clear that we will hold financial institutions accountable, including some of the nation’s largest, for lending discrimination,” said Deputy Attorney General James M. Cole. “An applicant’s creditworthiness, and not the color of his or her skin, should determine what loans a borrower qualifies for. 

“With today’s settlement,”, he continued, “the federal government will ensure that African-American and Hispanic borrowers who were discriminated against will be entitled to compensation and borrowers in communities hit hard by this housing crisis will have an opportunity to access homeownership.” 

The complaint 

The settlement, which is subject to court approval, was filed in the U.S. District Court for the District of Columbia in conjunction with the department’s complaint, which alleges that between 2004 and 2008, Wells Fargo discriminated by steering approximately 4,000 black and Hispanic wholesale borrowers, as well as additional retail borrowers, into subprime mortgages when non-Hispanic white borrowers with similar credit profiles received prime loans.   

All the borrowers who were allegedly discriminated against were qualified for Wells Fargo mortgage loans according to Well Fargo’s own underwriting criteria. 

The government also alleges that, between 2004 and 2009, Wells Fargo discriminated by charging approximately 30,000 black and Hispanic wholesale borrowers higher fees and rates than non-Hispanic white borrowers because of their race or national origin rather than the borrowers’ credit worthiness or other objective criteria related to borrower risk.  

“By reaching a settlement in this case, African-American and Hispanic wholesale borrowers who received subprime loans when they should have received prime loans or who paid more for their loans will get swift and meaningful relief,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.   “As one of the largest mortgage lenders in the country, Wells Fargo’s commitment to conduct an internal review of its retail lending and compensate African American and Hispanic retail borrowers who may have been improperly placed in subprime loans is significant. We will continue to work aggressively to ensure that all qualified borrowers have access to credit on an equal basis.” 

Race a factor 

The United States’ complaint alleges that black and Hispanic wholesale borrowers paid more than non-Hispanic white wholesale borrowers, not based on borrower risk, but because of their race or national origin.   Wells Fargo’s business practice allowed its loan officers and mortgage brokers to vary a loan’s interest rate and other fees from the price it set based on the borrower’s objective credit-related factors.   

This subjective and unguided pricing discretion resulted in black and Hispanic borrowers paying more. The complaint also alleges that Wells Fargo was aware the fees and interest rates it was charging discriminated against black and Hispanic borrowers, but the actions it took were insufficient and ineffective in stopping it.  

In addition, the complaint contends that, as a result of Wells Fargo’s policies and practices, qualified black and Hispanic wholesale borrowers were placed in subprime loans rather than prime loans even when similarly-qualified non-Hispanic white borrowers were placed in prime loans.   

The discriminatory placement of wholesale borrowers in subprime loans, also known as “steering,” occurred because it was the bank’s business practice to allow mortgage brokers and employees to place a loan applicant in a subprime loan even when the applicant qualified for a prime loan .   

In addition, Wells Fargo gave mortgage brokers discretion to request exceptions to the underwriting guidelines, and Wells Fargo’s employees had discretion to grant these exceptions.         

The department began its investigation into Wells Fargo’s lending practices in 2009 and received a referral in 2010 from the Office of the Comptroller of the Currency (OCC) which conducted its own parallel investigation of Wells Fargo’s lending practices in the Baltimore and Washington, D.C. metropolitan areas.  

The OCC found that there was reason to believe that Wells Fargo engaged in a pattern or practice of discrimination in these metro areas on the basis of race or color, in violation of the FHA and ECOA.

A federal class action claims Bank of America told customers its "PayPlan" of automatic weekly or fortnightly mortgage payments would save them money on interest, then "systematically and persistently" took the payments late and charged them even more interest.

In the suit, filed in Galveston, Long Ba Nguyen and Lan n Huynh say that BofA's “deceptive, unfair and conscionable” caused them to pay more interest over a longer period of time than they had agreed to.

Bank of America promoted PayPlan by promising customers that if they allowed the bank to withdraw the monthly mortgage payment in either twice-monthly or weekly installments, the customer would pay off their mortgage sooner, resulting in less interest expense over the life of the loan.

The customers and the bank agreed that the payments would be withdrawn on the same day of the month, typically the first and fifteenth.

But the suit charges that Bank of America manipulated the dates of the actual withdrawl and “systematically and persistently withdrew the customer's payment one to five days (or even more) later than agreed.”

As a result, more interest accrued on the unpaid balance of the loan. Further, when a payment was applied later than agreed, more of the payment went towards interest than toward principal.

Bank made more money

“Despite its promotion of the PayPlan to customers as a tool to save money, Bank of America actually used this tool to take more money from its customers,” the suit charges.

The suit seeks damages and restitution for all Bank of America and Countrywide mortgage customers who were enrolled in PayPlan.

The plaintiffs – who are husband and wife – refinanced their home in 2001, taking out a 15-year loan at a fixed interest rate of 7.25%. They signed up for PayPlan and a borrower's protection plan and were promised a 0.5% interest rate reduction for doing so.

But the plaintiffs later discovered that they were not given the 0.5% reduction. The bank modified the loan to reflect the changed from 7.25% to 6.75% and changed the bi-monthly payment from $643.73 to $430.47.

But on August 13, 2009, Bank of America unilaterally canceled the PayPlan and began imposing a fee for the automatic payment service. The bank also changed the payment dates.

Investigating the matter further, the plaintiffs found that not only had the bank changed the payment plan but had also extended the agreed-up loan maturity date without notifying the plaintiffs or seeking their consent, and without any Truth-In-Lending disclosures.

It was also at this time that the bank began withdrawing payments later than agreed, thereby subjecting the plaintiffs to higher interest rates than they would have paid under the original PayPlan agreement.

The suit charges the bank's actions amount to breach of contract, violation of the Truth-In-Lending Act, negligent misrepresentation and unjust enrichment.

A federal class action claims Wells Fargo Bank forces borrowers to take out too much flood insurance on their homes, then takes kickbacks and commissions on the insurance it takes out on their behalf. 

The suit was filed in U.S. District Court in Pittsburgh on behalf of Desiree Morris, of Washington, Pa., who said Wells Fargo acquired a $115,000 mortgage on her home in 2009. She currently owes about $113,000.

Upon taking out the loan, Morris said she bought flood insurance in the amount of $118,000. In November 2010, the policy was renewed and the coverage was increased to $129,800, a 10% increase from her previous level.

Morris argues that the higher amount exceeds federal requirements by more than $14,000.

She notes that federal law requires that homes which, like Morris', are in a flood plain must have insurance “in an amount at least equal to the outstanding principal balance of the loan or the maximum limit of coverage ...whichever is less.”

But that was only the beginning.

The month after her insurance was increased to $129,800, Morris received a letter from Wells Fargo which claimed that her flood insurance coverage was "less than the coverage required" and claimed that she was required to have insurance that would provide the full replacement cost for her home, up to $250,000.

Wells Fargo said in the letter that if Morris did not take out more insurance, the bank would do so for her, taking out a "lender-placed policy" and charging her for it. The letter said Wells Fargo had purchased $94,000 worth of additional flood insurance on a 90-day binder and said it would bill her escrow account for the $893 cost.

The demands in the letter were "fraudulent, deceptive and misleading," Morris' suit claims and it charges that Wells Fargo was "unfairly, unjustly and unlawfully enriched by the kickbacks, commissions or other compensation."

The suit seeks class action status on behalf of anyone who had a loan or line of credit with Wells Fargo who was required to purchase flood insurance.

It charges Wells Fargo with violating the Truth in Lending Act, breaching its agreement, violating the Real Estate Settlement Procedures Act and misappropriating funds held in trust, among other allegations.

By Mark Huffman
ConsumerAffairs.com

July 9, 2010
Wells Fargo is getting out of the subprime mortgage business, announcing plants to consolidate its Consumer Finance division.

The company said it expects 638 independent consumer finance offices will be closed as a result. In closing the offices, Wells Fargo said it is "exiting the origination of non-prime portfolio mortgage loans."

Subprime loans, often offered with low "teaser" rates, were the first to go bad, triggering a wave of foreclosures and precipitating the credit crises in late 2008.

The remaining consumer and commercial loan products offered through Wells Fargo Financial will be realigned with those offered by other Wells Fargo business units and will be available through Wells Fargo's expanded network of community banking and home mortgage stores, the company said.

The consolidation is also the result of Wells Fargo's 2008 merger with Wachovia. The bank says its customers now have access to its 6,600 Wells Fargo and Wachovia community bank stores and its 2,200 Wells Fargo Home Mortgage locations, eliminating the need for a separate network of Wells Fargo Financial local offices.

Fewer than two percent of all Wells Fargo's real estate loans were originated in Wells Fargo Financial stores in the first quarter of 2010, the company said.

"Our network of U.S.-based consumer finance stores, which have historically operated as an independent sales channel from our bank operations, have served customers well for more than 100 years," said David Kvamme, president of Wells Fargo Financial, "but the economics of a separate Wells Fargo Financial channel are no longer viable, especially now that our customers have access to the largest banking and mortgage store network in the United States."

The company said the restructuring of Wells Fargo Financial will not affect the number of community banking or home mortgage stores currently in operation. Customers with existing Wells Fargo Financial consumer loans and clients of Wells Fargo Financial's commercial businesses will continue to be served without disruption.

Consolidation

FHA home loans, auto loans and credit cards previously offered by Wells Fargo Financial will be consolidated with similar products across the company and will be offered through the company's network of community banking stores, mortgage stores, phone banks and wellsfargo.com. Wells Fargo Financial's commercial businesses will be realigned with business units within Wells Fargo over the next 12 months. However, Wells Fargo will no longer originate non-prime portfolio real estate loans.

Wells Fargo said it will also eliminate approximately 2,800 positions during the next 60 days, and 1,000 positions will likely be eliminated during the next 12 months.

Nearly a year after purchasing Wachovia, Wells Fargo may be prepared to consolidate the operations of the two banks.

The Los Angeles Times reports Wells Fargo will close 122 branches in California, as part of that consolidation. The paper quotes a bank official as saying that it will mostly be current Wachovia branches -- smaller and located near larger Wells Fargo branches -- that will be closed.

Even with the downsizing, Wells Fargo will remain one of the larger banks in California, with more than 1,000 branches in the state.

Wells Fargo brokered a deal to purchase Wachovia in the wake of last year's banking sector meltdown, when it suddenly became evident that a number of institutions were insolvent, because of their investment in mortgage backed securities.

In October 2008, The Charlotte Observer reported Wachovia experienced a "silent run" as large customers closed out their accounts, fearful of a collapse. As a result, there were real concerns the bank wouldn't be able to remain open.

The situation became urgent after Wachovia executives noticed an unusual number of withdrawals the day after the Washington Mutual failure. Many of the withdrawals were made by large corporate depositors, who had more than $100,000 in the bank. As a result, the bank's operating capital fell to dangerously low levels.

Illinois Attorney General Lisa Madigan has filed suit against Wells Fargo and Company, charging the bank discriminated against African American and Latino homeowners by selling them high-cost subprime mortgage loans while white borrowers with similar incomes received lower cost loans.

As a result of its discriminatory and illegal mortgage lending practices, Wells Fargo transformed our cities predominantly African-American and Latino neighborhoods into ground zero for subprime lending, said Madigan. The dreams of many hardworking families have ended in foreclosure due to Wells Fargos illegal and unfair conduct.

Madigans lawsuit, which is the result of an investigation into possible violations of fair lending and consumer fraud laws, cites marked disparities in Wells Fargos lending data. In 2005, according to an analysis of Chicago-area data, approximately 45 percent of Wells Fargos African-American borrowers and 23 percent of the lenders Latino borrowers received a high-cost mortgage. That same year, only about 11 percent of the lenders white borrowers received high-cost mortgages.

The trend continued in 2006, with approximately 58.5 percent of Wells Fargos African-American borrowers and 35 percent of its Latino borrowers in the Chicago area receiving high-cost mortgages, compared with only 16 percent of white borrowers. In 2007, approximately 49 percent of Wells Fargos African-American borrowers and 25 percent of Latino borrowers were sold a high-cost loan in the Chicago area, compared with only 15 percent of white borrowers.

The lawsuit also follows a recent Chicago Reporter analysis of mortgage data submitted by Wells Fargo to the federal government. That study found that, in 2007, Wells Fargo sold high-cost, subprime loans more often to its highest-earning African-American borrowers in Chicago than to its lowest-earning white borrowers. According to the study, in 2007, about 34 percent of African Americans earning $120,000 or more received high cost mortgages from Wells Fargo in the Chicago metro area, while less than 22 percent of white borrowers earning less than $40,000 received high-cost mortgages from the lender.

These disparities indicate that something is very wrong with Wells Fargos mortgage lending, said Madigan. They strongly suggest that the predictor of whether a borrower would receive a high-cost home loan from Wells Fargo was race, not income.

Madigans complaint alleges that Wells Fargo established highly discretionary lending policies and procedures with weak oversight that permitted Wells Fargos employees to steer African-Americans and Latinos into subprime loans. As cited in the complaint, Wells Fargos discretionary policies and procedures included a compensation structure that rewarded employees for placing borrowers into high-cost mortgages.

The complaint also alleges that Wells Fargo targeted African-American borrowers for the sale of high-cost loans by hosting a series of wealth building seminars in cities throughout the country, including Chicago.

Madigan noted that high-cost, subprime loans of the kind sold by Wells Fargo are defaulting and going into foreclosure in record numbers, and are largely responsible for triggering the worst economic recession in recent memory. The Attorney Generals complaint comes as the home foreclosure crisis continues to affect hundreds of thousands of homeowners in Illinois and across the nation. Illinois saw almost 69,000 foreclosure filings in the first half of 2009, up nearly 30 percent from the first half of 2008. In Cook County alone, it is anticipated that mortgage foreclosure filings will top 52,000 by the years end, compared with 43,876 in 2008.

By targeting African-Americans for the sale of its highest-cost and riskiest loans, Wells Fargo drained wealth from families and neighborhoods and added to the stockpile of boarded-up homes that are an open invitation to criminals, Madigan said.

Additionally, the lawsuit alleges that Wells Fargo Financial Illinois, a subsidiary of Wells Fargo and Company that primarily originated subprime loans, engaged in unfair and deceptive business practices by misleading Illinois borrowers about their mortgage terms, misrepresenting the benefits of refinancing, and repeatedly refinancing loans, also known as loan flipping, without any real benefit to consumers.

Also, the complaint maintains that Wells Fargo Financial used deceptive mailings and marketing tools to confuse borrowers as to which division of Wells Fargo and Company they were doing business with prime or subprime. As a result, borrowers believed they were doing business with Wells Fargo Home Mortgage, which offered mainly prime loans, when in fact they were dealing with Wells Fargo Financial, a predominantly subprime lender.

A class action lawsuit alleges that lending giant Wells Fargo profited off an unholy scheme with an appraiser owned by Wells Fargos parent company.

According to the suit, Wells Fargo requires borrowers to use Rels Valuation, an appraisal service owned by the same company that controls Wells Fargo. In turn, Rels, which uses third-party appraisers to perform the work, forces these vendors to come back with an appraisal that meets Wells Fargos expectations, and pays the appraisers well below market value for their services.

Despite the bargain that Wells Fargo receives on the appraisals, it continues to charge consumers the full amount for the service, and pockets the difference.

As described in the suit, Wells Fargos alleged scheme is exceedingly clever and complex. According to the suit, filed in the United States District Court for the District of Arizona, Wells Fargo pressures subcontracting appraisers to report back with a price that will allow Wells Fargo to underwrite the loan without significant obstacles, regardless of whether the figure is accurate.

Additionally, Wells Fargo allegedly informs the appraiser that they will pay them drastically less than the going market rate for their services. If the appraiser refuses to comply with either of these conditions, they are placed on Wells Fargos exclusion list, and are not considered for future appraisals.

Because of Wells Fargos giant stature — it is the number one mortgage lender in the nation — refusal to acquiesce in these demands could mean a drastic drop in appraisers business and significant damage to their reputation.

Under the rules laid out in the Real Estate Settlement Procedures Act (RESPA), no company is allowed to require consumers to use another company, as such arrangements practically invite the kind of price gauging alleged here. However, the Act makes an exception for lenders, since appraisals are ostensibly done to protect their interests, and allowing them to choose a trusted appraiser helps further this purpose.

Under RESPA, however, when a lender requires the use of a certain appraiser, they must inform the consumer both of the relationship and of the amount they were charged by the appraiser. According to the suit, Wells Fargo sometimes disclosed the relationship between themselves and Rels, but never disclosed the price they paid for the appraisals, giving consumers no indication that they were paying as much as twice what Wells Fargo had for the service.

The suit estimates that, given Wells Fargos size and influence, tens or even hundreds of thousands of homeowners have been victimized by the scheme.

It brings claims under both RESPA and the Racketeer Influenced and Corrupt Organizations Act (RICO), since the scheme was allegedly carried out across state lines via U.S. mail and interstate wire facilities. The suit also alleges unjust enrichment against Rels and breach of fiduciary duty and unfair competition against Wells Fargo.

Reader response

I would like to applaud Jon Hood for his bravery in telling the truth. I would also like to thank whatever Attorney(s) are involved and to lend support for their cause. Our business as honest, ethical appraisers has been derailed by these greedy companies. Did you know the CEO for Wells sat on the recent HVCC comittee to determine policy?

RC, Colorado Springs, CO

New York Attorney General Eliot Spitzer says a lawsuit filed against him by the federal Office of the Comptroller of the Currency (OCC) is a "shameful ... effort to shield the banks from scrutiny by state regulators." Spitzer has been investigating whether there are racial disparities in lending practices.

In a blistering response to the OCC's suit, Spitzer said the agency is working with banks to preempt the states from bringing consumer protection and anti-discrimination cases against national banks.

"It's unconscionable that the OCC would help the banks it regulates draft litigation to shield them from reasoned enforcement of consumer protection and civil rights laws and then sit at Counsel table right next to those banks, as happened in court this morning," Spitzer said.

"My office has asked a number of leading banks to disclose information regarding the interest rates charged on home mortgage loans. At issue is whether minorities are being charged higher rates. Evidence already disclosed by the banks appears to show a significant racial disparity that could violate state civil rights laws, which my office is responsible for enforcing," he said.

Spitzer said the OCC's claim "defies common sense and a century of joint state and federal oversight of the banking industry."

"This position, coming as it does after the OCC effort last year to shield nationally-chartered banks from enforcement of state consumer protection laws, is another indication that the Bush administration sides with corporate interests over consumer interests."

Spitzer noted that the OCCs efforts to protect banks has been opposed by all 50 state attorneys general and all 50 state banking superintendents. Numerous consumer groups also have voiced their opposition, as have the NAACP and AARP.

In recent testimony to Congress, New York State Banking Superintendent Diana Taylor said the OCC's actions "usurp the powers of the Congress, stifle state efforts to protect their citizens, and threaten not only the dual banking system but also public confidence in our financial services industry."

The OCC's action followed the filing of a similar suit by The Clearing House Association.

"This action is consistent with numerous other actions taken by The Clearing House over many years to help ensure uniform regulation of banks that operate in multiple states," the association said in a statement on its Web site.

It's the latest in a series of setbacks for the crusading attorney general. Last week, former Bank of America Corp. broker Theodore Sihpol was found not guilty of improperly trading mutual funds, the first real courtroom test of Spitzer's campaign against financial fraud.

"The OCC is absolutely committed to assuring that the national banking system is free of lending discrimination of any sort," said acting Comptroller of the Currency Julie L. Williams. "This issue is vital and it is complex and it must not be politicized."

"Last month, I reached out to the Attorney General's office to discuss how we each might work in a complementary way, in the areas of our respective jurisdiction, to ensure that laws against lending discrimination are upheld," she said.

"The Attorney General's office has indicated that it is not interested in pursuing such a collaborative approach. Unfortunately, the Attorney General's actions undermine the OCC's ability to effectively implement our supervisory responsibilities."

"While the New York Attorney General's office has legitimate authority for a great number of lending institutions operating in the state, federal law provides that lending activities of national banks and their subsidiaries are under the jurisdiction of the OCC," said Williams.

"These are not new legal standards," she added. "The laws here were enacted in 1864."

The Clearing House Association said the issue is "whether there should be uniform oversight of national banks that do business in many states."

"Regulation by potentially thousands of state and local governmental entities would exponentially increase the complexity of providing credit to consumers and significantly increase lending costs for financial institutions. The direct consumer impact would be higher borrowing costs and reduced access to mortgage financing," the association said.

The OCC is in the process of assessing new data collected under the Home Mortgage Disclosure Act as part of its fair lending evaluations.

"The efforts of the New York Attorney General to examine and direct the actions of national banks and their operating subsidiaries creates confusion and uncertainty concerning the OCC's authority and its supervisory expectations for national banks that undermines our ability to carry out our supervisory responsibilities," said Williams.

In its suit, the OCC noted that the New York Attorney General's office has sought both public and non-public information about the mortgage lending business of four national banks that do business in New York.

However, Section 484 of the National Bank Act, enacted in 1864, generally forbids any assertion of visitorial authority by state officers to supervise or examine national banks and prohibits state authorities from inspecting the records of national banks or bringing enforcement actions against national banks, except as specifically authorized by federal law.

Under federal law and OCC regulation, the operating subsidiaries of national banks are treated the same as the bank itself.

In seeking relief, the OCC's complaint states that the New York Attorney General's "violation of the federal law interferes with the OCC's ability to carry out its responsibilities under federal law, causing irreparable harm to the OCC's administration of the national banking system."

In addition to seeking a preliminary injunction, the OCC is asking the federal court to:

• Declare that the state Attorney General may not demand, examine, or inspect the books and records of national banks or their operating subsidiaries, except as specifically authorized under federal law.

• Declare that the New York agency has no authority to enforce the Equal Credit Opportunity Act, New York Executive Law section 296-a or other laws, rules or regulations concerning the banking activities of national banks or their operating subsidiaries except as specifically authorized under federal law.

• Permanently enjoin the New York Attorney General from demanding, examining or inspecting the books and records of any national banks or their operating subsidiaries, except as specifically authorized by federal law.

• Permanently enjoin the New York Attorney General from instituting any enforcement activities against national banks or their operating subsidiaries, except as specifically authorized by federal law and from any further usurpation of the OCC's exclusive authority to supervise and examine national banks or their operating subsidiaries, except as specifically authorized by federal law.

The Office of the Comptroller of the Currency was created by Congress to charter national banks, to oversee a nationwide system of banking institutions, and to assure that national banks are safe and sound, competitive and profitable, and capable of serving in the best possible manner the banking needs of their customers.