It’s unfathomable that I’d be writing an article on how to protect yourself from your own bank. Recently Wells Fargo made headlines for being fined $185 million because over 5,000 employees opened millions of fraudulent bank accounts without the consent of their customers. In addition, these employees opened over 500,000 credit card accounts without customer knowledge or approval. The true impact on customers is unknown and in many cases unknowable. For example, the simple act of applying for a credit card can have a negative impact on your credit score. A lower score can mean a higher interest rate on a loan or rejection of a loan request. In fact, Wells Fargo has so far reimbursed customers over $2.6 million in fees and penalties because of the fraudulent activities. What’s most disturbing is that Wells Fargo’s discovery of this illegal activity can be traced back to around 2011. The firing of these 5,000 employees didn’t happen last month, it’s been going on for years…meaning Wells Fargo has allowed the practices to persist until they finally got caught!
Why did this happen? Wells Fargo created the worst kind of culture…one where some employees felt pressured to break the law. Yes, they had sales incentives and quotas for opening new accounts. Interviews with many of these employees suggests they felt their very jobs were at stake if they did not meet sales quotas.
What does this mean for you?
If Wells Fargo is your bank– If you bank with Wells Fargo, contact your local branch and request they do a complete search of accounts under your name to be certain you are not affected. Then consider whether you want to follow the State of Illinois’ example and change banks. If you’ve had enough of this kind of nonsense, now’s your chance to do something about it.
If you bank elsewhere– Don’t assume this problem is limited to Wells Fargo. In fact, I suspect this may be more the rule than the exception. Just to be on the safe side ask your branch manager if any bank employees receive incentives or have quotas for opening new accounts. If the answer is yes, request a full review of accounts in your name.
Precautions everyone should take– Wells Fargo is just the tip of the iceberg. Conflicts of interest around compensation is pervasive throughout the marketplace. Just last week a bank customer told one of my partners about how he had sold a piece of property and deposited $500,000 in his bank checking account. Soon following, someone from the bank insurance sales department called and pitched him about buying an annuity … “at no cost to you and no fees!” This raises several red flags: Is it legal for a bank sales person to search through customer private bank records for ‘sales opportunities’? Is the ‘no cost-no fees’ statement true? How and how much is the salesperson being compensated? Here’s what you should do:
- Ask about compensation- In any transaction, if you don’t know how the person is being compensated, just ask! While everyone has a right to make a living, understand that you have a right to know how (and how much) they are being paid. But in knowing the answer to this question, you can better determine if the price you are paying is fair or if you should do more comparison shopping.
- Get your free credit reports- Go to AnnualCreditReport.com and order your credit report from Experian, TransUnion, and Equifax. You can receive one free every twelve months. Best advice: instead of ordering all three at one time, order one now; another in four months; and the last one in eight months and keep that cycle going year after year. Report any inaccurate data.
- Consider a third-party monitoring service- Each of the credit bureaus mentioned above offer ongoing monitoring services for a modest fee ($15-$25 per month) as well as other independent services such as LifeLock. They’ll notify you of any attempts to open new credit in your name.
FREE FINANCIAL ADVICE! Mark your calendars and plan to attend the Birmingham Financial Planning Expo. This free event will feature expert lead seminars on a variety of financial topics plus 30-minute one-on-one consultations with Certified Financial Planners. Date/Time/Place: Hoover Library; October 18th; 1p-5p. visit www.FPANA.org for more information.