Wells Fargo to Pay $4 Million for Illegal Fees and Misleading Customers

Michael Lux Blog, News, Student Loans 3 Comments

The Consumer Financial Protection Bureau (the CFPB) and Wells Fargo have agreed to a $4 million penalty for Wells Fargo’s student loan practices.

According to the CFPB Wells Fargo was improperly charging late fees, telling customers that partial payments would not count when in actuality they would settle some accounts, and for failing to correct inaccurate negative information submitted to the credit agencies.

Wells Fargo denies any wrongdoing but has agreed to the terms to put the matter behind them.

A portion of the $4 million agreement will be paid to borrowers who were victims of the improper practices.  Wells Fargo is currently preparing a plan to submit to the CFPB to identify the affected borrowers.

Lender Accountability

While $4 million may be a drop in the bucket for a large lender like Wells Fargo, this agreement is a big news for most student loan borrowers.

If you have spent any time managing your student loans, odds are pretty good that you have run into one or all of the following:

  • inaccurate information from your loan servicer
  • improper late fees
  • failing to correct inaccurate negative information sent to the credit bureaus

This case will serve as a warning to other student loan companies to make sure they are not guilty of any of these illegal student loan practices.

Using this information to your advantage

If you have been the victim of one of these student loan issues, it is definitely tempting to call your lender and remind them of the $4 million penalty Wells Fargo had to pay for doing the same thing that is happening in your individual situation.

Unfortunately, this will not likely help your cause.  Odds are pretty good you are talking with a customer support representative who is just trying to operate off a script and could care less about a massive payout made by another lender.

Instead, pay attention to the words and phrases used by the CFPB in the news articles regarding this incident.  If you ever run into a situation where bad information is costing you money or negative reporting isn’t being corrected, report your lender directly to the CFPB.

By going this route you accomplish several things.  First, you let your lender know that you are serious about addressing this issue – this is not some idle threat.  Second, you get the attention of someone at your lender a little higher up on the food chain.  This individual will be in a better position to address your issue than an average customer support person.  Finally, you get the CFPB involved.  In the CFPB’s short existence, the agency has proven to be a true advocate for student loan borrowers.

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Adam Smith
Adam Smith

I’m finding that some student loan refi websites are lenders and some are broker for the lender. My question still remains…
Surely, these student loan companies have to make money, how do they do
it? Do they charge fees, make it back on the interest rate? I know they
don’t work for free. No one talks about that part, but I’m sure they’re
getting paid. How do they stay in business and have large staffs if they
aren’t charging?

Does anyone know how the back end office piece works?

Adam Smith
Adam Smith

Thanks! I searched before I posted, but must have missed it!