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WELLS FARGO PENALIZED OVER UNLAWFUL STUDENT LOAN SERVICING PRACTICES

  • Jared Hartman, Esq.
  • Posted on August 28, 2016

 

On August 22, 2016, the Consumer Financial Protection Bureau (“CFPB”) entered into a consent order with Wells Fargo over the manner in which Wells Fargo has been unlawfully handling its student loan servicing practices. The CFPB is a federal government agency that is tasked with investigating unlawful and unfair practices that creditors, banks, and debt collectors engage in with respect towards consumers. If violations are discovered and alleged, the CFPB has the power to issue a wide array of penalties that could include ordering a business to close its operations. Needless to say, when the CFPB sets its targets on a financial entity, the company should be in fear.

On August 22, 2016, the Consumer Financial Protection Bureau (“CFPB”) entered into a consent order with Wells Fargo over the manner in which Wells Fargo has been unlawfully handling its student loan servicing practices. The CFPB is a federal government agency that is tasked with investigating unlawful and unfair practices that creditors, banks, and debt collectors engage in with respect towards consumers. If violations are discovered and alleged, the CFPB has the power to issue a wide array of penalties that could include ordering a business to close its operations. Needless to say, when the CFPB sets its targets on a financial entity, the company should be in fear.

Before we discuss specifics, it is important to note that inquiries remain on the consumer’s credit reports for two years. Soft inquiries will have less of an effect on the consumer’s credit score than hard ones. So what’s the difference?

  • Processing payments in a way that maximized fees owed by consumers. Specifically, if a borrower made a payment that was not enough to cover the total amount due for all loans in an account, Wells Fargo divided that payment across the loans in a way that maximized late fees rather than satisfying payments for some of the loans. The bank failed to adequately disclose to consumers how it allocated payments across multiple loans, and that consumers have the ability to provide instructions for how to allocate payments to the loans in their account. As a result, consumers were unable to effectively manage their student loan accounts and minimize costs and fees.
  • Billing statements misrepresenting to consumers that paying less than the full amount due in a billing cycle would not satisfy any obligation on an account. In reality, for accounts with multiple loans, partial payments may satisfy at least one loan payment in an account. This misinformation could have deterred borrowers from making partial payments that would have satisfied at least one of the loans in their account, allowing them to avoid certain late fees or delinquency.
  • Illegally charging late fees even though timely payments had been made. Specifically, charging illegal late fees to payments made on the last day of their grace periods, and also charging illegal late fees to certain students who elected to pay their monthly amount due through multiple partial payments instead of one single payment.
  • Failing to update and correct inaccurate, negative information reported to credit reporting agencies about certain borrowers who have made partial payments or overpayments.

For these unlawful practices, Wells Fargo must pay at least $410,000.00 to consumers as compensation for illegal collection fees and late fees, and must allocate partial payments made by a borrower in a manner that satisfies the amount due for as many of the loans as possible, unless the borrower directs otherwise. Wells Fargo must also provide consumers with improved disclosures in billing statements, which must explain how the bank applies and allocates payments and how borrowers can direct payments to any of the loans in their student loan account. Wells Fargo must also remove any negative student loan information that has been inaccurately or incompletely provided to a consumer reporting agency. Wells Fargo must also pay a $3.6 million penalty to the CFPB’s Civil Penalty Fund.

The CFPB’s consent order can be ready by clicking HERE.

Clearly, this is not a light slap on the wrist that banks typically believe they should get, and this strong action by the CFPB should hopefully send a clear message to Wells and other financial institutions that they must take consumer rights very seriously and respect consumers as human beings instead of just another financial account on the books.

If you or a loved one have concerns over any account being serviced or owned by Wells Fargo, please do not hesitate to contact our law firm for a free and confidential consultation to discuss your rights.

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DOES A DEBT COLLECTOR OR BANK REFUSE TO ACCEPT YOUR CLAIM OF IDENTITY THEFT?

  • Jared Hartman, Esq.
  • Posted on January 15, 2016

 

Imagine a bank—such as Wells Fargo—contacts you and claims you owe them money on a credit card that you’ve never heard of. You ask some questions about the time and location of the application, and you discover that, indeed, this account was opened in your name fraudulently. You tell Wells Fargo’s agents that you never opened this account and you have been the victim of identity theft. However, they ignore your complaints and persists in calling you in an attempt to collect. You are now facing the very real future of continued harassing calls, threatening letters, potential debt collection lawsuits against you, potential wage garnishments and bank levies, and potential negative credit reporting against your name and social security number. All over an account that you never opened. What do you do? How do you protect yourself?

In California, consumers who are the victims of identity theft are actually protected by law from debt collection activity upon the account opened under identity theft, but you cannot just sit idly by and hope everything falls into place. You must take action, and we at Semnar & Hartman, LLP are experienced in helping!!

Under California Code 1798.92-1798.93, if you or a loved one have been the victim of identity theft, you can bring a lawsuit against a debt collector or bank that is claiming they are owed money upon the fraudulent account in order to have a judicial finding (called declaratory relief) that you are not liable upon the account. In connection with such a lawsuit, you can request a court order (called an injunction) that the debt collector or bank stop trying to collect from you, and you can also have the court order that any security interest (such as a car title loan or home mortgage loan) is void and unenforceable. Moreover, if the bank or debt collector has filed a lawsuit against you, you can file a counter claim against them seeking dismissal of their lawsuit in addition to declaratory relief and an injunction.

In order to recover attorneys’ fees, costs of litigation, actual damages, however, you have to put them on written notice of the identity theft and provide them a copy of either a police report or DMV report showing that you lodged a formal report as a victim of identity theft. You have to provide this written notice and the police report to the address identified by the creditor as being their address for processing identity theft claims. You have to also wait 30 days after providing such notice before filing suit. If they have failed to diligently investigate the claim and persisted in their efforts to collect despite your compliance with all of the above, then you may also be able to recover a statutory penalty against them for up to $30,000.00 in addition to actual damages, attorneys’ fees, and costs of litigation.

A sample complaint against Wells Fargo for this very type of allegation can be found by clicking here.

There are other laws under the Federal Fair Credit Reporting Act that protect your credit reports from suffering derogatory accounts opened under identity theft and fraud, that prevent new fraudulently accounts from being reported, that require the credit reporting agencies to remove accounts that have been identified by you as identity theft, and place a freeze on your credit and prevents new accounts from being opened entirely. However, these laws require their own steps to be taken by you and will be reported under a different article. We are experienced in handling these claims as well.

We can help you protect yourself!!! Do not hesitate to contact us immediately for a free and confidential consultation to discuss your rights and to see how we can help.

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HARASSING PHONE CALLS BY WELLS FARGO MORTGAGE

  • Jared Hartman, Esq.
  • Posted on April 28th, 2015

 

Semnar & Hartman, LLP is currently investigating claims against Wells Fargo Mortgage regarding harassing telephone calls in connection with their collection of mortgage payments. It is believe that Wells Fargo places harassing robo-calls, autodialed calls, and/or calls with pre-recorded and/or artificial voice messages to consumers who have not previously consented to receive such calls for purposes of collecting upon mortgage payments. In most instances, robocalls and robo text messages violate the Telephone Consumer Protection Act (TCPA), and generally each violations allows for $500 to $1,500 per violation.

If you or a loved one has received such calls and/or text messages from Wells Fargo Mortgage, we invite you to please contact us for a free and confidential consultation.

TCPA Protections Against Unconsented Robocalls, Autodialed calls, and text messages

The TCPA became law in 1991, putting restrictions on automated calls, autodialed calls, calls with pre-recorded and/or artificial voice messages, and text messages, whether sent for debt collection or telemarketing purposes. In most circumstances, an entity must have a person’s prior express consent in order to make automated or prerecorded calls or text messages. See our “Phone calls” webpage or blog postings regarding TCPA violations for more detailed information.

If you or a loved one have received robocalls or text messages from Wells Fargo Mortgage, we encourage you to fill out our contact form so that we can evaluate your rights. We have experience handling alleged TCPA violations and are committed to providing you answers while holding institutions like Wells Fargo Mortgage accountable. We look forward to speaking with you.

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LAWSUITS ALLEGE WELLS FARGO BANK HAS ENGAGED IN MULTIPLE ACTS OF HARASSMENT, MISREPRESENTATIONS, AND DECEPTION TOWARDS ITS OWN CUSTOMERS

  • Jared Hartman, Esq.
  • Posted on November 25, 2014

 

Multiple lawsuits have been filed recently against Wells Fargo Bank, N.A. alleging various violations of consumer rights.

In one case, the customers allege that they had a home mortgage loan with Wells Fargo in the State of Kansas that resulted in a short-sale, through which Wells Fargo received the benefit of approximately $9,000.00 more than the debt actually owed on the loan. Unfortunately, however, Wells Fargo did not properly update their records, as they suddenly started calling the customers repeatedly and demanding that the customers still owed them approximately $111,780.35 on the loan. When the customers tried to explain that Wells Fargo had already been paid that amount plus an additional $9,000.00 more, the representatives refused to listen to the customers and argued with them about how the customers were wrong.

Additionally, the lawsuit alleges that Wells Fargo reported to the State of California Franchise Tax Board that the customers earned income within the State of California in tax year 2010, which prompted the Tax Board to issue notices of levies upon one of the customer’s wages for back taxes. However, the customers did not reside in the State of California in the year 2010, and the home mortgage loan dealt with property located in the State of Kansas. This lawsuit has alleged multiple violations of the Rosenthal Fair Debt Collection Practices Act to seek compensation for the emotional distress caused by Wells Fargo’s multiple incidents of deception, misrepresentation, and attempting to collect unlawful amounts. This complaint can be read here. WF Complaint 1

In another case, the customer had a student loan account with Wells Fargo. The lawsuit alleges that the customer transferred a payment from his Wells Fargo checking account into his student loan account in order to make a payment on his student loan obligation. Thereafter, Wells Fargo’s checking department reversed the payment without informing the client, which caused him to go into default on his student loan account without knowledge and without any fault of his own. The lawsuit further alleges that the student loan department began placing an unreasonable and obscene amount of calls to the customer and demanding that his acceleration clause kicked in to the point where he now owed the full amount of the loan, and the collection agents refused to listen to his explanation of how the default was no fault of his own.

After a Wells Fargo representative finally agreed that the default was no fault of the customer and reversed the default status on the account, Wells Fargo failed to properly update the customer’s consumer credit report and maintained that he was in default status, and even reported two derogatory accounts for the customer even though he only had one student loan account. The lawsuit therefore seeks redress for multiple violations of the Rosenthal Fair Debt Collection Practices Act and the State and Federal Fair Credit Reporting Acts for Wells Fargo’s unfairness at reversing the student loan transfer, misrepresentations as to the acceleration clause being triggered, attempting to collect improper amounts, and failing to properly report accurate information upon the customer’s consumer credit report. This complaint can be read here. WF Complaint 2

Another lawsuit alleges that Wells Fargo unfairly harassed the customer’s elderly mother during a time when she could not be subjected to undue stress in her life. The lawsuit alleges that the customer had not even defaulted upon his home mortgage loan, but for some reason Wells Fargo placed at least 35 calls to his mother between November 4, 2014 and November 21, 2014 and claimed that they were looking for her son. The mother repeatedly told the agents that the son does not live with her and she has nothing to do with the son’s home mortgage loan, and repeatedly insisted that they stop calling her. However, Wells Fargo refused to honor her request and maintained their persistence in calling her. The mother was recovering from a recent cardiac procedure and had been advised by her doctor to avoid all stress, and she was also grieving from the recent passing of her mother-in-law. The lawsuit alleges that Wells Fargo’s persistent placement of harassing calls to her increased the stress inflicted upon her at a time when she should not have had to be bothered by Wells Fargo. This lawsuit seeks redress for multiple violations of the California Rosenthal Fair Debt Collection Practices Act for unfair and harassing phone calls to both the customer and his mother. This complaint can be read here. WF Complaint 3

If you or a loved one are having to suffer harassment inflicted by Wells Fargo similar to the above lawsuits, please do not hesitate to call us for further information as to what your rights are and how you can stand up for yourself. The playing field does not have to be one-sided in the industry of consumer credit. Our nation’s financial super powers should NOT be permitted to treat their own customers in such a fashion and should be taught that they have to uphold and respect consumer rights! As always, any consultation about consumer rights is done free of charge and maintains confidentiality.