Big banks’ predatory practices hurt customers and workers

Earlier this month, the Consumer Financial Protection Bureau levied the biggest fine in the agency’s history — $100 million -– against Wells Fargo, to stop the predatory banking practices that are harming consumers and to stop managers from pressuring workers to “meet impossible sales goals or lose your job.” Combined with penalties levied by other agencies, Wells Fargo must pay $185 million, provide full refunds to consumers, and ensure proper sales practices.  

These predatory tactics run the gamut from pushing multiple credit card accounts to opening home equity lines of credit that could jeopardize the homeowner’s property or opening accounts and products in a customer’s name without the customer’s consent. 

{mosads}Today, the Senate Banking Committee will examine the aggressive and unfair sales tactics of Wells Fargo and other big banks. It’s important, however, that senators see the root of the problem: the extreme pressure these banks put on low-wage employees to generate sales or face discipline and termination.  

My union, the Communications Workers of America, is part of the Committee for Better Banks, an organization of bank workers, community leaders, and advocates who are fighting back against the predatory practices of some of the country’s biggest banks and the poor treatment of bank workers.

After the CFPB and regulators levied a $185 million fine, Wells Fargo fired 5,300 workers and basically said “problem solved.” Does anyone believe that 5,000 people, completely on their own, decided to engage in these tactics involving more than 2 million transactions? We hope that senators will ask what happens to workers who don’t meet their sales quotas or refuse to engage in predatory practices handed down from their managers. From our work with bank workers nationwide, we know the answer: they are fired.     

Interestingly, the executive who was in charge of this predatory sales plan at Wells Fargo also left the company, but with an enormous $125 million parting gift of stock and stock options. And bank CEOs across the industry continue to receive big paychecks and bonuses; compensation for top bank CEOs last year rose 23 percent (Bank of America), 27 percent (Citi), and 35 percent (J.P. Morgan).  

One-half of the nation’s 1.7 million bank workers are tellers or customer service workers. One-third are eligible for public assistance, like food stamps, Medicaid, and Children’s Health programs, because wages are so low, researchers at the University of California found. Almost all are struggling to make ends meet and are in constant fear of losing their jobs if they do not meet their sales and performance goals.

Fees and service charges on deposit accounts, credit cards, and other products accounted more than a quarter of Wells Fargo’s revenue last year. No wonder Wells Fargo could assure shareholders that “noninterest income was relatively stable in 2015 … reflecting our ability to generate fee income.” 

The flip side: Americans spent $32 billion on bank overdraft fees in 2013 alone. Consumer complaints to the CFPB concerning retail banking have increased by 34 percent in the past year.

At a briefing this summer, bank workers met with Members of Congress and talked about the tremendous pressure they face to reach their impossible sales quotas and sell high-interest credit cards and other financial products to customers. 

Khalid Taha, until just recently, was a personal banker at a Wells Fargo branch in San Diego. He says: 

“On a daily basis, I’m expected to sell 10 to 15 personal accounts, two to three new accounts, two to three credit cards or loans, and make a daily referral to an insurance or mortgage.”

Julie Miller worked in retail banking at Wachovia and Wells Fargo for eight years, becoming a branch manager at a Wells Fargo branch in Pennsylvania before leaving the industry.  She recounts: “As branch manager I was instructed by Wells Fargo to increase my branches sales 35% every year. My branch is not in a huge city or major metropolitan area, there is a finite customer base. So where was that additional 35% supposed to come from? The only place it could come from was our existing customers, which means selling them more products.”

Wells Fargo isn’t alone in using these aggressive tactics. Santander Bank, which operates in the U.S., also was fined by the CFPB for enrolling customers in overdraft protection without their consent and ordered to stop using outside contractors and sales quotas to sell these products. 

There are banks that operate without these predatory sales programs by putting customer interest first and paying workers a fair wage and benefits. That’s the real solution to this problem. 

Chris Shelton is president of the Communications Workers of America, representing 700,000 men and women in telecommunications, customer service, media, airlines, public service, and manufacturing.

The views expressed by authors are their own and not the views of The Hill.


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