WASHINGTON — Sen. Elizabeth Warren, D-Mass., sent a letter to Wells Fargo CEO Tim Sloan on Tuesday asking him to address reports that the bank is struggling to compensate customers who were victims of unnecessary fees and add-on products.
In August, Wells admitted that it sold auto insurance to 600,000 customers without proper disclosures and that some customers had been charged insurance premiums inappropriately. The bank announced a few months later that it had charged 110,000 customers fees to extend mortgage rate locks between 2013 and 2017 even though the bank was the source of processing delays that made extensions necessary.
“You have an obligation to your customers to improve your efforts so that every customer harmed by Wells Fargo is fully and promptly compensated with minimal hassle and frustration,” Warren said in the letter.
For the two episodes together, Wells said it would make $178 million in redress payments.
But The Wall Street Journal recently reported that repayments for the auto insurance victims were being bungled and that in order to receive compensation for the rate lock fees, customers had to “opt in,” which would result in as many as half of the victims not filing the proper paperwork.
“To address how it happened and what you intend to do to remediate these problems, I ask that you please provide answers to the following questions no later than February 28, 2018,” the letter said.
Warren asked a series of questions, including whether the reports were true, as well as how many customers were harmed, how much money the bank estimates will be paid to customers and if the bank will reform its repayment plan for victims.
She was also particularly critical of the opt-in feature for victims of the unnecessary charges on rate locks.
“Will Wells Fargo commit to revising its refund process for victims of the mortgage rate lock extension scam so that victims automatically receive their due compensation rather than having to opt in to receiving it?” she said.
In a statement, a spokeswoman for Wells Fargo said the bank "remains focused on making things right for our customers and is working with its regulators to ensure that these ongoing auto and mortgage remediations are completed accurately and as quickly as possible."
"Our auto remediation is underway and we expect it to be substantially completed by mid-year," the spokeswoman said. "We have also begun sending refunds to customers who previously contacted us to question their mortgage rate lock extension fees, and continue to work with our regulators on plans for contacting the remaining customers who paid those fees and invite them to request a refund if they believe that they were charged fees inappropriately."
