Wells Fargo Bank offers a loan product called Direct Deposit Advance available through their online banking web site and automated tellers. It is designed to compete with payday loans. Unlike payday loans, Wells Fargo has direct access to the borrower's bank account and can extract payment after any direct deposit transaction over $100, even one day after the loan is granted. They can leave the borrower's account overdrawn and impose overdraft fees in addition to the high rate loan fee (10% of the principle). It is not at all unusual for the fees to exceed the value of the original loan.
The nature of this loan is implied but not made obvious from the disclosure on the web site. It is not fully explained when calling their service center on the phone. However, a written statement disclosing this fact can be obtained by making a request in person at any branch office.
There is no legitimate purpose for making a loan that has no minimum term. This financial instrument exists to enhance revenue generation from bank fees. Borrowers who wish to take out a quick and convenient loan to avoid overdraft fees should be warned that this loan can ultimately end up costing them more.
The bank will not be sympathetic with individuals who seek a remedy to the problems that the Wells Fargo Direct Deposit Advance can create. It is a matter of official bank policy. The product is doing exactly what it was intended to do. Employees are very well trained and practiced.
People who consider payday loans are often in a desperate situation looking for a quick solution to an immediate need. Individuals are easily deceived into thinking that the Wells Fargo Direct Deposit Advance is a safer alternative to storefront payday loans because it is being represented by a major banking institution. If they take advantage of this financial instrument, Wells Fargo will automatically recognize their vulnerability and take advantage of them and their situation - knowing full well that these disadvantaged people are unlikely to have the resources to challenge the deceptive practice.
These are not necessarily people who are irresponsible or negligent with their financial matters. Many are people whose income has not kept pace with recent inflation, have lost jobs, or have seen significant downturn in their personal business.
Wells Fargo uses the Direct Deposit Advance loan to identify desperate, vulnerable people who can easily be taken advantage of without risk of significant reprisal. This is, by definition, predatory. The vague and elusive nature of the disclosures makes it deceptive.
There are "Approximately 881 Reports" filed on this web site against Wells Fargo Bank. Many of these are probably the result of various irresponsible actions on the part of customers. However, it indicates great dissatisfaction with the customer service policies at the bank. And, many of these reports contain official rebuttal from bank employees. This clearly indicates knowledge and forethought.