Time To Hit Reset: NetSpend, Wells Fargo And PayPal

Finally freed up from the “will we/won’t we” of the election season — it seems everyone got back to work this week to ready to hit “reset.” Wells Fargo isn’t just resetting itself — it’s inspiring waves of rethinking. NetSpend is in hot water with the FTC and could face a non-optional reset. And PayPal and Apple used Siri to play nice together.

It’s finally over, and despite some early misplaced concerns about a stock market apocalypse midweek — it seems the financial part of the world has survived intact.

Which means it is time to hit the reset button and get back on track now that the Presidential horse race has officially ended. And it seems we’re are not the only group of people eager to hit reset this week — all over the payments and commerce landscape there are signs that everyone is itching to get on with “what’s next.”

So, what’s next? Wells Fargo is getting their ethics hotline act together and inspiring changes to everyone else’s incentive structures, NetSpend has some re-evaluating to do after the FTC came down hard on them this week and — just in time for Christmas — PayPal and Apple have found a way to make the world an easier place to send money to and from.

Ready to take the plunge?

Wells Fargo — Resetting And Inspiring Others To Do The Same

Wells Fargo’s upper level executive team is on something of a speaking and listening tour as the bank tries to get back on track following the $100 million in fines it was levied for creating millions of fraudulent customer accounts.

That effort is being led by new CEO Timothy Sloan, who told a group of thousands at an employee town hall that the vast majority of calls to the ethics line had been handled correctly — and that it was only a minority of cases that required further investigation.

The Department of Labor is already involved in an investigation of retaliation claims at Wells.

“If we find complaints were mishandled, then we will take action to make it right,” Sloan said. “I want to be very clear in assuring you that you can have confidence in calling the ethics line, and your call will be handled appropriately. Retaliation is unacceptable. It’s against our policy…it will not be tolerated at Wells Fargo” he further emphasized.

That assurance comes in response to wide accusations that whistle-blowers were routinely culled from the company when they attempted to highlight questionable behavior among fellow employees related to fraudulent account creation.

Wells Fargo has neither admitted or denied wrongdoing after paying a $185 million settlement related to its sales practices issues. The bank is in the process of making sure that as many as the 2.1 million customers affected see any fraudulently taken funds returned.

And while Wells is working its own reset, it also has other firms rethinking some resets of their own – particularly as it relates to their pay incentive structures and what types of employee behavior they are rewarding. One of the oft-named culprits in the Wells Fargo scandal is a compensation structure that created perverse incentives for employees to violate the law.

According to a recent report, serveral firms are now trying to overhaul how they compensate salespeople in an effort to improve customer service and prevent the bad behavior that did Wells Fargo in.

GlaxoSmithKline is rethinking sales compensation by dropping sales commission. Commissions are now based on employee knowledge and customer satisfaction.

Variable pay is also being phased out or reduced, and replaced by a bigger focus on bonusing on the basis of firm performance.

And while some changes may be in the offing, some experts note that performance-based pay is likely not going anywhere — since at the end of the day it is one of the more direct ways to incent better performance.

“They’re thinking about it. They’re talking about it,” noted Dan Walter, CEO of compensation consulting firm Performensation — the firm behind the report. “But there [are] only a few ways you can pay and reward people.”

Then again – no one wants to be on the wrong side of that equation, and find themselves in the kind hot water Wells Fargo now finds themselves trying to coof off.

Speaking of hot water…

NetSpend Ends Up On The Wrong Side Of The FTC

The Federal Trade Commission said on Thursday (Nov. 10) that NetSpend Corp. has been misleading the consumers of its prepaid cards with promises that they would have immediate access to funds, with “no holds and no waiting.”

As it turns out — there are both holds and waiting, and thus a horde of angry customers complaining of delays of access to funds tied to their cards. The allegations are that customers’ issues begin at activation and persist afterwards. The verification has proven especially onerous, and the funds loaded onto cards are sometimes rendered inaccessible.

The complaint further alleges that once those consumers had asked for refunds, the waits continued — sometimes for weeks. NetSpend is accused of using that time to levy fees that helped drain funds even further.

In response to the FTC actions, NetSpend said in a statement that it “intends to vigorously contest this complaint and has substantial defenses to do so.” In its statement NetSpend further notes that legal requirements to know their customers are behind the delays — and they have no option but to fulfill their legally mandated duties.

“At issue in the complaint is whether consumers were deceived because of NetSpend’s compliance with federally mandated obligations under the USA PATRIOT Act to confirm the identity of those acquiring NetSpend prepaid cards. NetSpend takes seriously and carefully adheres to these legal mandates to fight identity theft, money laundering and terrorist financing and believes that no one was deceived or harmed by the company’s compliance with these legal obligations.”

Customers, for their part, are citing grave harms — including eviction and automobile repossession as a direct result of the holds.

The statement went on to note that NetSpend’s complaints issues are broad — and in some cases issued from the FTC.

“The complaint also relates to NetSpend’s fraud controls, which are required by federal law, including the FTC’s own Red Flags Rule, to monitor accounts for account takeover and possible fraud in order to protect consumer funds. These processes are not deceptive, but instead comply with the law and protect consumers.”

This seems like the beginning of a long — and rather pitched — fight.

But, then again, sometimes allies pop up in the strangest places.

Siri Makes PayPal And Apple Friends

At a time when it may seem that no one is capable of getting along with anyone for any length of time — we felt it our duty to demonstrate that no matter how opposed the interests may seem, it is always possible to find common ground and be friends.

This week’s answer to the call for peace on Earth and goodwill were Apple and PayPal, with the announcement that PayPal is giving its users Siri for Christmas.

It’s been a good year for for P2P transfers on the PayPal platform — which encompasses eponymous PayPal as well as Venmo and Xoom. As of yet, PayPal has done $41 billion in P2P transactions in 2015 — and is expecting that holiday 2016 will bring on another 17 million transactions across its services.

And now Siri is invited to the Christmas party. Siri + PayPal will be online for consumers in 30 nations, and it works much like using Siri for anything else — tell “her” who the money is going to and how you want them to get it — and Siri, via PayPal, makes it happen.

Jingle all the way — as they say — and pay.

So what did we learn this week?

You never quite know what’s coming next — and the more sure you are that you’re right, the more likely you are to be wrong. But the good news, we learned this week, is the reset button, and the fact that it can always be hit. And in the words of Scarlett O’Hara, “After all, tomorrow is another day.”



Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

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