• Report: #350530

Complaint Review: Wells Fargo Direct Deposit Advance Loan - Predatory And Deceptive

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  • Submitted: Sat, July 12, 2008
  • Updated: Thu, July 09, 2009

  • Reported By:Eagle Idaho
Wells Fargo Direct Deposit Advance Loan - Predatory And Deceptive
420 Montgomery Street San Francisco, California U.S.A.
  • Phone: 800-869-3557
  • Web:
  • Category: Banks

Wells Fargo Direct Deposit Advance Loan Deceptive and predatory San Francisco California

*Consumer Suggestion: Predatory - do not think so

*Consumer Comment: In Response to Edward's Comments Attacking Kevin

*Author of original report: In response to Kevin's comments

*Consumer Comment: A couple of things...

*UPDATE Employee: Most of your information is correct.

*UPDATE Employee: Most of your information is correct.

*UPDATE Employee: Most of your information is correct.

*Consumer Comment: making loans for crooked car lots

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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.

Edward
Eagle, Idaho
U.S.A.

This report was posted on Ripoff Report on 07/12/2008 02:20 PM and is a permanent record located here: http://www.ripoffreport.com/r/Wells-Fargo-Direct-Deposit-Advance-Loan-Predatory-And-Deceptive/San-Francisco-California-94104/Wells-Fargo-Direct-Deposit-Advance-Loan-Deceptive-and-predatory-San-Francisco-California-350530. The posting time indicated is Arizona local time. Arizona does not observe daylight savings so the post time may be Mountain or Pacific depending on the time of year.

Ripoff Report has an exclusive license to this report. It may not be copied without the written permission of Ripoff Report.

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REBUTTALS & REPLIES:
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Updates & Rebuttals

#1 Consumer Suggestion

Predatory - do not think so

AUTHOR: Poorbetterthandebt - (U.S.A.)

While it can be called predatory, no one makes me sign up for these or any other financial services. These are straight forward and one must be shrewd and read in detail what one is getting involved in. I see the link right there all the time - and in fact when I opened the account, the agent told me I can have the advance feature disabled. I think its great, and has its purposes - while even now considering a small advance, would prefer another way and not have to deal with it, or get used to it and as the agent told me - there are folks that stuck themselves in the advance cycle - always borrowing, paying 10%, payday, repay - rinse and repeat.

If anyone is having an issue with it, call Wells, get it disabled for their account and it ought not be an issue again - at least with Wells - as they'll probably be heading to a check cashing place instead. Granted I have borrowed for life issues, but this for some is a lifestyle - like living on credit cards. Been there, and refuse to go back as much as I can.
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#2 Consumer Comment

In Response to Edward's Comments Attacking Kevin

AUTHOR: Rippoffsentry - (U.S.A.)

Edward-

Thank you for your original post detailing the Wells Fargo Direct Deposit Advance. I have used the service a couple times and appreciate it was there in my emergencies. You are right about the product being predatory in nature, 10% interest for less than a 2 week period, however I have found it to be less expensive than a bounced check or missing a day of work because a car was broken down.

The reason I just registered on this site was to make a comment about your last reply to Kevin.
Your attack was totally unjustified. The comments Kevin made were all valid. You took the points he made as some kind of personal attack and really went overboard. I can tell that someone like you must have constant problems with everyone he encounters, from the mailman to the gas station attendant, you are obviously confrontational and not a very happy person.

I hope in the future you can behave in the spirit of community, helping people and not attacking them because they post information that might be slightly contrary to your views. If anything Kevin was backing up several of the points you had made earlier and was only contributing to the discussion. Did he attack you? No. Did you attack him? Yes. The right thing to do would be to apologize.
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#3 Author of original report

In response to Kevin's comments

AUTHOR: Edward - (U.S.A.)

Kevin,

You said "Most of the facts that you've presented about Direct Deposit Advance are very true." I don't see any facts that you dispute. Do you actually dispute any of the facts?

As if to state a contrary fact, you said "However, the advance must be at least one business day old at the time." How does this differ from what I said?

The "next day" repayment will leave a borrower's account overdrawn if the borrower was intending for it to cover expected transactions (a very likely scenario). Instead of covering the expenses, the "loan" just cleans out the account - preparing it for OD and NSF fees. If there was a minimum term to the loan (one or two weeks), then this wouldn't happen. Don't payday loans have a minumum term? As I understand it, the customer writes a post dated check for some agreed term (usually a week or two) and the payday loan company cashes it on the due date.

Tell me, what is the APR on a $500 loan when the interest is $50 and the term is one day? Which seems more reasonable and reputable, the payday loan company who agrees to a minimum term for the loan, or Wells Fargo who would demand payment one day after granting the loan. And, if the OD and NSF fees are considered (and they are considerable!), which is taking greater advantage of their customer - payday loan companies or Wells Fargo?

You mention all the statements of policy, terms, and conditions of the loan - how a customer can (and should) take them very seriously. And, you rightly state that there is every chance to cancel the entire transaction if the customer does not agree to the finance charge or terms. So, is the official Wells Fargo Customer Satisfaction Policy summed up in the phrase: "caveat emptor"?

I'm not going to dispute the terms, conditions, or policies of Wells Fargo Bank. I'm not going to claim that they are illegal, unethical, or even immoral. I just hope to make it clear that the Wells Fargo Direct Deposit Advance loan is deceptive and predatory. As you have remided us, the bank provides official statements warning it's customers to beware of this product. And, when a customer complains about adverse consequences, the official bank response is "Let the buyer beware." That's what "caveat emptor" means. It's the principle that the seller of a product cannot be held responsible for consequences that buyers might suffer as a result of the transaction - at least not in a legal sense. But, public opinion might not be so kind.

So, how does my "Ripoff Report" differ in any way with what Wells Fargo is telling it's customers? All I'm doing is warning people about a financial loan product which can easily do more harm than good. Wells Fargo and I appear to be in complete agreement. Rather than argue with my report, you should embrace it. So, I'm left wondering again why you posted a rebuttal which doesn't seem to rebut any of my points.

Perhaps you have a problem with the public disclosure of the statements of policy, terms, and conditions of the Direct Deposit Advance loan - especially when it includes a clear and concise explanation of it's objective. But wouldn't that be tacit admission that they are deliberately made to be vague and obscure?

I appreciate your posting the disclaimer from the web site. If I showed it to 100 people and asked them to tell me if they thought it meant that the loan could be collected on the day after it was granted, how many do you think would say "yes"? How many do you think would say they thought it was possible but didn't believe Wells Fargo would do such a thing? How many do you think would say that Wells Fargo designed this loan to be collected as quickly as possible, with the highest possible revenue in fees? The results of such an experiment would demonstrate the deceptive potential for this disclaimer.

The statement available at bank branches includes an example which specifically states that payment can be extracted the very next day. Why isn't this statement used on the web site? Why do the two statements differ? Do you believe that desperate people looking for emergency financial relief will carefully collect all the various differing policy, terms, and condition statements about the Direct Deposit Advance loan berfore considering it? Do you suppose that they have the resources to seek legal advice on the subject before proceeding?

Perhaps what bothers you the most is the idea that Wells Fargo would design a financial instrument which is intended to take advantage of people who are in desperate circumstances. That bothers me - and it would bother a whole lot of Wells Fargo customers. Especially when the official explanation for harm suffered is "caveat emptor". It re-defines the whole relationship and makes it much more adversarial.

On the subject of targeting, I offer an analogy. Poisoned lemonade only appeals to people dying of thirst. They might not be in the ideal situation to fully comprehend all the possible consequences of drinking it - especially if those consequences are spelled out in fine print legalese on various differing statements. They will likely consider the trustworthiness of the source more than anything else. Is this person really intent on doing them harm? Why would someone offer poisoned lemonade for people to drink? Only the most vile and debauched individual would do such a thing. Maybe it's not so good but dying of thirst is worse! These warnings must be CYA statements for the lawyers. After all, this is a well known person who is an upstanding member of the community that has conducted business here for many years. Surely they do not have malicious intent! I would not take lemonade from someone with a reputation of selling poison, but I would take it from this person because they have a good reputation.

It's OK if you don't understand why I think this loan product is deceptive and predatory. Anyone else reading this will.
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#4 Consumer Comment

A couple of things...

AUTHOR: Striderq - (U.S.A.)

The payday loan companies will use the same process to take their payment from your account. The only difference is with the payday loan payment it may or may not casue an overdraft fee (but a NSF fee if returned unpaid) whereas if naot paid withing 35 days the Wells Fargo repayment will definately go through. And even at 10% interest this rate is still better than any from a payday lender

Aside for James: even though you're completely off topic, I'll answer your question. It's called a bad case on purchasing on your part. Doesn't matter what the car cost at any time in the past. the question is how much did you sign a contract for?
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#5 UPDATE Employee

Most of your information is correct.

AUTHOR: Kevin - (U.S.A.)

Hi Edward,

Most of the facts that you've presented about Direct Deposit Advance are very true. An advance that a customer makes is repaid after a direct deposit of $100.00 or more. However, the advance must be at least one business day old at the time.

Yes, the repayment might leave a borrowers account overdrawn IF he or she does not have a direct deposit 35 days after the advance is taken. Whether the advance is done online, atm, or via phone bank, the customer must agree to the rules of the advance before the transaction can be processed.
He/she is told that the repayment will be taken out of the next direct deposit of $100 or more, or after 35 days if no direct deposit is received. (When requesting that advance via phone, you must listen to the ENTIRE disclosure, it will not let you skip ahead to the advance unless you listen from start to finish..I know from my own advance experience) Also the customer is informed that there is a $2 finance charge for each $20 advanced. There is even a chance to cancel the entire transaction if the customer does not agree to the finance charge or terms.

I'm not sure how the Direct Deposit Advance targets a certain class of people. Any customer (man/woman, young/old, married/single) who has recurring direct deposits of $100 or more coming into his or her account will eventually qualify for the direct deposit advance service. Some customers have a $100 limit, some $200, some have the $500 max limit.

Some have never used the Advance, even though they've had the credit limit there for years. Some have used it for an emergency once, and never touched it again. Some use it over and over again. Different customers will use that service in different ways.

I copied & pasted some information about the Direct Deposit Advance service right from the Wells Fargo web site. I hope this might help any questions you may have.

There must be something about the Direct Deposit Advanced that was not to your liking. What was your experience with the Direct Deposit Advance?





Outstanding advances and Finance Charges are automatically repaid from any electronic deposit of $100 or more that is deposited directly into your checking account that received the advance as long as the advance is more than one business day old. For example, if you receive your paycheck every two weeks, your outstanding advance and Finance Charge will be repaid on the same day your paycheck is deposited

If the outstanding advance amount and Finance Charge is not repaid in full by the 35th day after the advance, the bank will automatically debit the outstanding balance from your Checking Account regardless of the account balance. If the automatic repayment overdraws your account, checking account service fees, such as overdraft fees, may apply.

For every $20 advanced, the Finance Charge is $2, without regard to how long the advance remains outstanding. The Finance Charge is reflected as an Annual Percentage Rate (APR) in the Direct Deposit Advance section on your personal Checking Account monthly statement.

Please Note: Alternative forms of short-term credit exist that may be less expensive and more suitable to your needs.
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#6 UPDATE Employee

Most of your information is correct.

AUTHOR: Kevin - (U.S.A.)

Hi Edward,

Most of the facts that you've presented about Direct Deposit Advance are very true. An advance that a customer makes is repaid after a direct deposit of $100.00 or more. However, the advance must be at least one business day old at the time.

Yes, the repayment might leave a borrowers account overdrawn IF he or she does not have a direct deposit 35 days after the advance is taken. Whether the advance is done online, atm, or via phone bank, the customer must agree to the rules of the advance before the transaction can be processed.
He/she is told that the repayment will be taken out of the next direct deposit of $100 or more, or after 35 days if no direct deposit is received. (When requesting that advance via phone, you must listen to the ENTIRE disclosure, it will not let you skip ahead to the advance unless you listen from start to finish..I know from my own advance experience) Also the customer is informed that there is a $2 finance charge for each $20 advanced. There is even a chance to cancel the entire transaction if the customer does not agree to the finance charge or terms.

I'm not sure how the Direct Deposit Advance targets a certain class of people. Any customer (man/woman, young/old, married/single) who has recurring direct deposits of $100 or more coming into his or her account will eventually qualify for the direct deposit advance service. Some customers have a $100 limit, some $200, some have the $500 max limit.

Some have never used the Advance, even though they've had the credit limit there for years. Some have used it for an emergency once, and never touched it again. Some use it over and over again. Different customers will use that service in different ways.

I copied & pasted some information about the Direct Deposit Advance service right from the Wells Fargo web site. I hope this might help any questions you may have.

There must be something about the Direct Deposit Advanced that was not to your liking. What was your experience with the Direct Deposit Advance?





Outstanding advances and Finance Charges are automatically repaid from any electronic deposit of $100 or more that is deposited directly into your checking account that received the advance as long as the advance is more than one business day old. For example, if you receive your paycheck every two weeks, your outstanding advance and Finance Charge will be repaid on the same day your paycheck is deposited

If the outstanding advance amount and Finance Charge is not repaid in full by the 35th day after the advance, the bank will automatically debit the outstanding balance from your Checking Account regardless of the account balance. If the automatic repayment overdraws your account, checking account service fees, such as overdraft fees, may apply.

For every $20 advanced, the Finance Charge is $2, without regard to how long the advance remains outstanding. The Finance Charge is reflected as an Annual Percentage Rate (APR) in the Direct Deposit Advance section on your personal Checking Account monthly statement.

Please Note: Alternative forms of short-term credit exist that may be less expensive and more suitable to your needs.
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#7 UPDATE Employee

Most of your information is correct.

AUTHOR: Kevin - (U.S.A.)

Hi Edward,

Most of the facts that you've presented about Direct Deposit Advance are very true. An advance that a customer makes is repaid after a direct deposit of $100.00 or more. However, the advance must be at least one business day old at the time.

Yes, the repayment might leave a borrowers account overdrawn IF he or she does not have a direct deposit 35 days after the advance is taken. Whether the advance is done online, atm, or via phone bank, the customer must agree to the rules of the advance before the transaction can be processed.
He/she is told that the repayment will be taken out of the next direct deposit of $100 or more, or after 35 days if no direct deposit is received. (When requesting that advance via phone, you must listen to the ENTIRE disclosure, it will not let you skip ahead to the advance unless you listen from start to finish..I know from my own advance experience) Also the customer is informed that there is a $2 finance charge for each $20 advanced. There is even a chance to cancel the entire transaction if the customer does not agree to the finance charge or terms.

I'm not sure how the Direct Deposit Advance targets a certain class of people. Any customer (man/woman, young/old, married/single) who has recurring direct deposits of $100 or more coming into his or her account will eventually qualify for the direct deposit advance service. Some customers have a $100 limit, some $200, some have the $500 max limit.

Some have never used the Advance, even though they've had the credit limit there for years. Some have used it for an emergency once, and never touched it again. Some use it over and over again. Different customers will use that service in different ways.

I copied & pasted some information about the Direct Deposit Advance service right from the Wells Fargo web site. I hope this might help any questions you may have.

There must be something about the Direct Deposit Advanced that was not to your liking. What was your experience with the Direct Deposit Advance?





Outstanding advances and Finance Charges are automatically repaid from any electronic deposit of $100 or more that is deposited directly into your checking account that received the advance as long as the advance is more than one business day old. For example, if you receive your paycheck every two weeks, your outstanding advance and Finance Charge will be repaid on the same day your paycheck is deposited

If the outstanding advance amount and Finance Charge is not repaid in full by the 35th day after the advance, the bank will automatically debit the outstanding balance from your Checking Account regardless of the account balance. If the automatic repayment overdraws your account, checking account service fees, such as overdraft fees, may apply.

For every $20 advanced, the Finance Charge is $2, without regard to how long the advance remains outstanding. The Finance Charge is reflected as an Annual Percentage Rate (APR) in the Direct Deposit Advance section on your personal Checking Account monthly statement.

Please Note: Alternative forms of short-term credit exist that may be less expensive and more suitable to your needs.
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#8 Consumer Comment

making loans for crooked car lots

AUTHOR: James - (U.S.A.)

Ibought a car in norman okla the sales man told me the car cost 20,000 whin i got home i found sales reseat saying it cost 15,000 new it was 2 years old the business was big red imports wellsfargo made the loan if that is not crooked what is
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