And the debacle (a word I love because of its onomatopoeia potential) of Wells Fargo appears to be continuing. CNN/Money is now reporting they stand accused of victimizing vulnerable small businesses:
For several years, Wells Fargo’s merchant services division overcharged small businesses for processing credit card transactions, a lawsuit alleges. Business owners who tried to leave Wells Fargo were charged “massive early termination fees,” according to the lawsuit filed in US District Court.
The “overbilling scheme” targeted less sophisticated businesses by using “deceptive language” in a 63-page contract designed to confuse them, the lawsuit filed on August 4 claims. The lawyer filed court documents to seek class action status.
The latest controversy centers on Wells Fargo Merchant Services, a joint venture that is 60% owned by Wells Fargo and 40% controlled by First Data (FDC).
A former employee of the Wells Fargo (WFC) business told CNNMoney that he was instructed to target these small businesses.
“We used to be told to go out and club the baby seals: mom-pop-shops that had no legal support,” he said in an interview. The former Wells Fargo employee spoke on the condition of anonymity, but CNNMoney verified that he worked for Wells Fargo Merchant Services.
Keeping in mind Wells Fargo is vigorously denying these accusations, what’s the first thing that comes to mind? Sad to say, Wells Fargo appears to have Trumpetized those small businesses. Much like Trump, in his businessman role, refusing to pay his contractors and banking on their inability to engage in a running legal battle, WF appears to have decided to use their superior position to rip off the small businesses.
Some purists may wish to blame the small businesses, but truth to tell is that the small businesses often cannot afford the legal expertise to assess these contracts, they cannot assess these offers themselves as the legal field is extremely specialized and what may appear to be clear language to the non-specialist is a minefield to the experienced eye of the lawyer, and yet they cannot afford to not avail themselves of these services – otherwise, they will operate at a lethal disadvantage to the competition.
Assuming WF really engaged in this behavior, it’s rather remarkable that a bank, an institution which should have a long-term view, is engaging in a behavior which, while profitable over the short-term, is so damaging over the long-term. If word of this really penetrates deeply into American culture, it’s quite possible that the customers for these services will dry up, moving on to US Bank and other competitors – who are operating at an ethical advantage. But I can see how this happened, based on Deb’s post initiating this thread:
Here’s the thing: I worked for Wells Fargo for 19 years, In that time I witnessed the bank, first as Norwest, later as Wells Fargo (and then as Wachovia in all but name) evolve from a bank that was…well… a bank, offering checking, savings and loan accounts to private citizens and businesses, into a retail store, selling financial products. By the end of my tenure at Wells, if you were a banker, teller, broker, financial advisor, loan officer or manager for the bank , your yearly bonus (if any), performance rating, opportunity for advancement, and salary were directly tied to how many financial products you sold each quarter.
This is not an atmosphere conducive to building relationships. When you sell a product, you often do not have a continuing relationship with your customer. It’s a thing, it goes out the door, and if you’re lucky you won’t see the red-faced customer at the Customer Service counter, demanding his money back.
But building relationships is where the real money lies. Having a happy customer who is achieving their goals, with your help, is how you get them to come back and spend more of their money.
But what WF may be doing is akin to stripping a mountain slope of all its trees. You may have a big initial profit, but thereafter your ground is barren, slumping into the river, and basically ruining the landscape. And no profit for you.
Wells Fargo is leaving money on the table through Instant Greed. Are these guys even professionals anymore?
And, yes, as I discussed in the last post on this thread, we did sell our WF investment this week, before this report broke. Not in fear that we’d lose money on the investment – I have no idea if these scandals will impair their stock over the long term.
But in disgust at their behavior.
