Nearly a year after angrily grilling Wells Fargo CEO Tim Sloan over his exorbitant compensation following several scandals at the bank, Sen. Elizabeth Warren (D-Mass.) took aim at the institution again Thursday with a letter attacking its practice of offering bank accounts to college students and then hitting them with steep fees—which have had what the lawmaker calls "disastrous effects" on students.
Wells Fargo has for years partnered with dozens of U.S. colleges and universities, opening on-campus branches and offering students accounts and debit cards as well as other financial products. The bank is far from the only institution to do so, with BankMobile offering more student accounts than Wells Fargo—but the bank charges its student customers far more than its competitors in annual fees.
"Students served by Wells Fargo are getting ripped off." —Sen. Elizabeth Warren (D-Mass.)
"When granted the privilege of providing financial services to students through colleges, Wells Fargo used this access to charge struggling college students exorbitant fees," Warren wrote to Sloan. "These high fees, which are an outlier within the industry, demonstrate conclusively that Wells Fargo does not belong on college campuses."
According to a Consumer Financial Protection Bureau (CFPB) report (pdf) from last year, which examined relationships between nearly 600 colleges and 14 banks, Wells Fargo's student customers paid an average of $46.99 in annual fees—nearly four times as much as students paid to other banks.
While Bloomberg notes that Wells Fargo has identified college students as its fastest-growing customer base, Warren suggested the student population has also provided the bank with its latest opportunity to unfairly profit off its clients.
From the senator's letter:
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The revelations included in the [CFPB] report suggest that Well Fargo's shameful culture of squeezing its customers—opening millions of fake accounts, charging customers for car insurance they did not need or know about and then repossessing cars for unpaid premiums, improperly foreclosing on hundreds of homes—remains intact despite numerous regulatory actions and your repeated public assurances that the company has changed.
"Students served by Wells Fargo are getting ripped off," Warren concluded.
The senator also took issue with the fact that low-income students suffer disproportionately from Wells Fargo's unusually high fees, considering they are more likely to overdraw their accounts. The bank has claimed that their fees are higher because "customers use their accounts in different ways," but, as Warren wrote, "it has provided no evidence that the students it serves have meaningfully different financial needs than students served by Wells Fargo's competitors that charge little to nothing in fees."
Warren also called on college campuses to cut ties with Wells Fargo, as their agreements with the long-troubled bank make them complicit in the mistreatment of student customers. The senator sent letters to the 31 colleges where the bank does business—including University of Arizona, several California State schools, El Paso Community College, and University of North Carolina—urging them to end the relationships.
Warren's letter to Wells Fargo comes weeks after she announced that she had formed an exploratory committee ahead of a potential presidential campaign, with a vow to fight "billionaires and big corporations" on behalf of working families. It also follows a letter to the Education Department, which she signed in December calling for strict enforcement of federal rules regarding campus bank accounts.
The Department, Warren and several Democratic colleagues wrote, "has failed to protect students who use federal financial aid and are charged unfair fees on financial products that institutions of higher education are paid to promote. This failure has allowed harm to come to students while benefiting large financial institutions like Wells Fargo."