Subprime Lending News 7/31/17:
Wells Fargo in hot water (again), pay-by-phone schemes on the rise, and the top 10 consumer complaints of 2016.
By Caroline Thompson
Wells Fargo is really leaning into its role as the banking industry’s most prolific super villain. Read on for all the craziest subprime lending stories from this weekend and beyond!
2016’s top 10 consumer complaints place auto industry at number one.
Every year, the Consumer Federation of America and the North American Consumer Protection Investigators team up to conduct an annual consumer agency survey, analyzing complaints received by local consumer protection agencies, and creating a list of the top 10 biggest consumer issues. This year’s list places complaints about misrepresentations and faulty repairs in the auto industry at number one, and also includes complaints about shoddy and incomplete work in the home improvement industry and billing and fee disputes in the credit/debit industry. Utilities, retail sales, health services, internet companies, landlord/tenant relationships and home solicitations were also cited as major problems for consumers in 2016.
Wells Fargo calls for discriminatory lending lawsuit to be thrown out in Philadelphia.
As we reported last week, the city of Philadelphia has filed a lawsuit against Wells Fargo for allegedly using discriminatory lending practices against Black and Latino home borrowers. But the big bank is fighting back, saying that the city can’t prove that their lending tactics lead to a loss of revenue for the city, and asking the court to dismiss the case on the grounds that the city did not meet the years statute of limitation for Fair Housing Act claims. A lawyer for the bank stated that while the bank vehemently denies any discriminatory lending practices, “Even if the non-conclusory fact allegations are accepted as true, except to the extent that the allegations are contradicted by the public record, the complaint should be dismissed as a matter of law.” Essentially, Wells Fargo is saying that even if they did engage in these illegal practices, no one can definitively prove it.
Bureau of Consumer Financial Protection warns against pay-by-phone schemes.
A variety of companies across the country are being flagged by the Consumer Financial Protection Bureau for tricking consumers into expensive pay-by-phone schemes. The CFPB alleges that many consumers have been mislead into thinking that paying by phone, which usually carries a large fee, is the only way to complete a transaction, even though less expensive options exist.“The Bureau is warning companies about tricking consumers into more expensive fees when they pay bills by phone,” said CFPB Director Richard Cordray. “We are concerned that companies are misleading consumers about pay-by-phone fees or keeping them in the dark about much cheaper or no-cost payment options.” The CFPB released a bulletin today detailing the practice and warning both companies and consumers against it. “The CFPB recommends that financial institutions take steps to ensure that they are following laws related to pay-by-phone fees,” they wrote in the bulletin. “Companies should review state and federal laws to confirm they can charge such fees, and review their policies and procedures. Companies should also review consumer complaints about fees that are charged.”
Wells Fargo must pay $80 million to auto-loan customers erroneously forced to purchase insurance.
In yet another faux pas from the scandal-laden bank, Wells Fargo has agreed to compensate around 570,000 customers who were forced to buy auto insurance they did not need. The bank required all customers taking out auto loans to have full-coverage damage insurance, but did not double check whether those customers had already purchased their own before buying additional coverage on their behalf. As a result, about 274,000 customers were pushed into delinquency due to the cost of the additional insurance, and another 25,000 customers had their vehicles wrongfully repossessed.