It seems Wells Fargo just can’t get out of its own way. The banking institution, founded more than 160 years ago, came under fire in September for illegally inflating its sales numbers by setting up unauthorized bank and credit card accounts – some for unwitting customers, others for customers who didn’t exist. CEO John Stumpf appeared twice before congressional finance leaders to apologize, agreed to forfeit at least $41 million in pay, and said Wells Fargo would cease the sales incentive program that led to the termination of 5,300 employees and $185 million in fines and penalties from the Consumer Financial Protection Bureau. He also agreed to make things right with affected bank customers, although how exactly that will happen remains to be seen.
If you think Wells Fargo is alone in its attempts to cross-sell banking customers into additional products, you’re wrong. Cross-selling is a common tactic among financial services institutions (and many businesses in other industries as well). When I searched for “how to do cross selling” online, nearly 14 million results appeared. So the biggest takeaway for consumers should not be – “Oh, those poor Wells Fargo customers!” Instead, consumers should consider whether they could be vulnerable to the same type of situation, and what steps they could take to protect themselves. Here are three lessons we can learn from the Wells Fargo debacle:
Lesson 1: Read Your Statements
In the days before the internet, individuals responsible for their families’ finances would receive banking and other statements in the mail and reconcile them by hand. I don’t see many people using paper checkbook registers anymore, because it’s becoming easier and easier to manage accounts online, or with mobile apps and software, like Quicken, GnuCash, AceMoney, YNAB4, and Mint.com, among others. While it’s tempting to ignore statements and the process of reconciling, these steps remain an important part of good financial stewardship. (And don’t forget to review your other bills as well. Remember the cramming issues that led to penalties for wireless providers?)
Lesson 2: Check Your Credit Reports
When was the last time you checked your credit report? You can do it for free once a year from AnnualCreditReport.com. Why is it important? Your credit history is central to your financial well-being. Mistakes or unauthorized accounts that appear on your credit report, left unchallenged, could compromise your ability to get a job, buy a home, or get a lower interest rate on a loan. When you check your credit report, look for any unauthorized “hard inquiries” (inquiries conducted by financial institutions when you apply for credit). Too many could lead to a lower credit score. Then take these steps to contest the inquiries and protect yourself.
Lesson 3: Get It in Writing
It’s unrealistic to expect that a sales person (financial or otherwise) won’t attempt to cross-sell you. Make it a policy to ask for written terms and conditions prior to agreeing to purchase additional products; then ask for a document that you can sign that includes the terms and conditions you’re agreeing to. If you don’t wish to authorize the sale, ask if the company has a document you can sign that shows you have chosen to opt out of the purchase.
Vigilance is a critical factor in keeping your personal finances safe. While you may not be a Wells Fargo customer, it still makes sense to keep a watchful eye on all of your accounts, change your passwords often, keep back-ups and other documentation, and take steps early to investigate anything that seems out of order. In the case of Wells Fargo, the company now admits that it may have been setting up phony accounts for nearly 10 years. Don’t wait to discover a problem before it can damage your credit score or your finances!
At AMDG Financial, we take our motto, “From financial wisdom, better stewardship,” seriously. If we can be of assistance to you in becoming a better steward of your money, please don’t hesitate to contact us.