Security & Fraud

Wells Fargo Identifies Fraud, Aggressive Tactics In Credit Card Processing Unit

Wells Fargo has reportedly overhauled the credit card processing business due to an internal inquiry that found some of its employees were falsely reporting customers’ sales and steered small businesses into contracts that were expensive and confusing.

According to a report in The Wall Street Journal citing unnamed current managers, Wells Fargo has fired two dozen or more employees of Wells Fargo Merchant Services during the course of the past two years because of those practices and other violations of the bank’s policies. The WSJ noted the practices that harmed small business customers wasn’t previously made public. The WSJ reported that Wells Fargo discovered the new abuses after delving into a broad inquiry into the practices of the bank given the fake accounting scandal last year. Wells Fargo told the WSJ in a statement that the bank has taken “significant steps” to improve Wells Fargo Merchant Services, its merchant-processing unit for credit- and debit-card payments. While merchant processing isn’t a sexy business, a lot of small business owners told the WSJ that high-pressure sales tactics are common in the industry, as are complex pricing structures and expensive early termination fee that lock customers into contracts.

Citing the Nilson Report, the WSJ noted that merchant processors earned $18.15 billion in debit and credit card fees last year. Wells Fargo, JPMorgan Chase and Bank of America are among the largest players in that area. In February Wells Fargo announced it has overhauled its Payments, Virtual Solutions and Innovation Group, with the new structure focused on enhancing the unit’s efforts in the payments market. In a press release, Wells Fargo said it is focusing on payments, artificial intelligence and application programming interfaces (APIs) to help increase its payments efforts and speed up opportunities with corporate banking customers. Wells Fargo said the investments in each area will help the company create digital banking products and make it easier for customers to achieve their financial goals.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out the February 2019 PYMNTS Digital Fraud Tracker Report

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