Wells Fargo Isn't the Only Bank That Draws Cross-Selling Complaints
September 28 2016 - 8:40AM
Dow Jones News
WASHINGTON—Problematic sales practices at banks may extend
beyond the abuses revealed in this month's $185 million enforcement
action against Wells Fargo & Co., according to a new analysis
of customer complaints maintained by the U.S. government.
While customer complaints don't equal illegal conduct, the
complaint database run by the Consumer Financial Protection Bureau
shows that Wells Fargo hasn't been much of an outlier when it comes
to complaints associated with cross-selling and other sales
abuses.
The analysis of the database by S&P Global Market
Intelligence shows that the CFPB received 1,576 complaints about
Wells Fargo's account management, including how it opened and
closed accounts, from Jan. 1, 2015 to Sept. 20, 2016. That area,
which generally corresponds with the recent allegations that Wells
Fargo opened unwanted accounts for its customers, generated about
1.3 complaints for every billion dollars in deposits at the bank as
of June 30, according to a Wall Street Journal analysis of the
S&P report.
Other banks had similar levels of complaints. Citigroup Inc.
customers' 1,722 account-management issues during the nearly
21-month period represented 1.8 complaints for each $1 billion of
deposits at the bank. Bank of America Corp. customers had 1.7
complaints, using the same metric, while customers of J.P. Morgan
Chase & Co. had 1.1.
But financial-services companies say you can't put much stock in
the database, which has been up and running for more than five
years and reached a million complaints last week. They argue the
portal is rife with inaccurate information because the CFPB doesn't
verify consumers' complaints, merely that the person making the
complaint is a customer of the institution. They also say
complaints are often mislabeled by the consumer or put into a
category that's too broad.
A Citigroup spokeswoman said many of the complaints the bank
received this year pertained to promotional offers for which some
customers weren't eligible, adding that its volume of complaints is
"amongst the lowest compared to peers" if data are tracked back to
2012. A Wells Fargo spokeswoman said the bank takes customer
feedback "very seriously" and works with each customer to try to
find solutions. A J.P. Morgan spokeswoman had no comment. Bank of
America officials weren't available for comment.
Federal regulators do use the database, however, and have vowed
to investigate whether problematic sales practices at Wells Fargo
extend to other lenders. Analysts say the problems at Wells Fargo
put pressure on government agencies to more closely regulate the
cross-selling of products and incentive compensation tied to tough
sales goals.
The Los Angeles City Attorney's office, which played an early
role investigating Wells Fargo, said it used the CFPB database as
part of its probe. Companies have also looked at it to identify
internal problems and see how they compare to competitors. CFPB
Director Richard Cordray has described the database as a "compass"
that plays a "central role in everything we do."
According to the S&P report, set to be released this week,
the portal shows that the CFPB received nearly 14,000 customer
complaints across the banking industry related to account
management, and 638 on unsolicited credit cards, another allegation
in the Wells Fargo case. Wells Fargo customers made 28 complaints
related to cards, which was lower than big-bank peers, but higher
when adjusted for the relatively small size of its credit-card
business.
In the category of unsolicited issuance of credit cards, the
company that received most complaints was PayPal Holdings Inc.,
with 122 complaints between Jan. 1, 2015, and Sept. 20, 2016.
PayPal in May 2015 settled allegations by the CFPB that it
illegally signed up tens of thousands of customers for unwanted
credit. PayPal neither admitted nor denied the allegations in the
settlement and a spokeswoman said at the time the company is
continually improving its products and enhancing communications
with customers. The company didn't respond to a request for
comment.
Write to Yuka Hayashi at yuka.hayashi@wsj.com
(END) Dow Jones Newswires
September 28, 2016 08:25 ET (12:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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