Wells Fargo Credit Customers Overcharged (long)

I thought I'd share this with the group, in case there are any West Coast members who are affected...

I have recently discovered a serious software bug with the Wells Fargo on-line credit banking which has allowed Wells Fargo to collect bank fees and finance charges for at least a year that they were not entitled to.

This on-line bug only affects former First Interstate Bank customers who have a Balance Plus credit account that has been migrated to the Wells Fargo credit system. First Interstate Bank had Balance Plus accounts as a means of overdraft for their checking accounts. These two accounts were linked together and monies flowed to and from each to the other automatically. Wells Fargo has no such equivalent kind of overdraft account. Wells Fargo only allows separate MC or Visa credit card accounts or personal savings accounts to be "linked" as a means of overdraft protection. Normally, such credit card accounts are, in fact, just that. They are usually MC or Visa accounts with plastic cards that a consumer can use for traditional purposes. In order to allow former FIB customers to migrate forward without having to open an actual credit card account, WF created a "virtual" credit card account in their system to replace the former Balance Plus accounts. These accounts do not have actual plastic cards and cannot be used for consumer purchases. They exist only for overdraft, but are managed by the credit card division, assigned credit card numbers (for system compatibility) and have separate billing statements and payment methods. The on-line banking system allows consumers to manage these virtual accounts directly on-line the same way as they would normal MC or Visa accounts.

The problem, however, is that Balance Plus accounts are unique. They incur transaction fees for each business day in which a transaction (overdraft) is posted. Normal credit cards have no such associated fees and only incur bank-generated transactions on the billing cycle date when finance charges are posted. The on-line system only accounts for bank-generated charges on the actual cycle date. Bank charges are ignored the rest of the month. Therefore, since these BP fees are actually posted to the account on a regular basis during the billing cycle, consumers are incorrectly reported that they have a higher available credit than they actually do. This results in consumers drawing from these reported funds when they, in fact, do not exist, and often result in penalties and fees they did not think they would incur. On the billing cycle date itself, 30 days worth of previously posted bank charges are instantly merged into the on-line version of the previous month's account statement. Note that up to the day prior to the billing cycle, none of these transactions were reported. These back-dated transactions are then computed as adjustments to the previous calendar day's balance, resulting in a radically incorrect "running balance" being displayed. The incorrect computation of the running balance will even show as a credit when in fact monies are still owed As of last week, my account incorrectly reported that I had a credit balance of $1,920 when in fact I still owed $1,560.

As a result of the incorrect balance due, on-line customers would have been unable to confirm their real account balances and would not have been able to prevent being charged overlimit fee and excessive finance charges.

Wells Fargo finally investigated this problem after I supplied them with screen shots capturing the computational errors. Note that Wells Fargo representatives use an "internal" computer system that does not show the "external" view that consumers see, and therefore had no idea that this had been happening for quite some time.

This problem has existed at least as far back as October 2003 when the on-line banking software was last updated, but it may have existed as far back as the FIB merger. The cumulative amount of transaction fees and overlimit fees resulting from on-line customers tapping funds they did not actually have represents the dollar amount which I believe Wells Fargo could be held liable for should any organized class-action lawsuit or other means of action be taken.

As a follow-up, I received a phone call from Wells Fargo today in response to my demand for compensation for damages resulting from their on-line banking error. They agreed to refund me all bank-related charges including transaction fees, penalities, and overlimit fees dating back to last year. This comes to roughly $1000. The damages are much more extensive, but this will require an extensive amount of research to be done by an attorney as part of a class-action suit.

Wells Fargo's acknowledgement of the on-line problem, subsequent correction, and undisputed payment of damages to me for simply being a Wells Fargo credit on-line banking customer, should set the precedent for thousands of customers in my position. A huge number of consumers are entitled to large refunds they don't even know about, but they must be made aware of this situation in order for them to collect. Wells Fargo will not be pro-actively contacting customers about this. The financial impact would be tremendous.