Persistence of shareholders calling for end to predatory lending program pays off.
1/17/2014 – After a long-term engagement with Wells Fargo to promote more responsible lending products, today CBIS and other members of the Interfaith Center on Corporate Responsibility (ICCR) wish to commend management for making the right decision in ending its Direct Deposit Advance program. The company issued a statement today announcing that it would discontinue the product effective February 1st.
The Direct Deposit Advance program targeted cash-strapped customers in need of quick credit solutions, but similar to payday loans, Wells Fargo’s Direct Deposit Advance carried hefty fees. As advances and fees are repaid automatically, in full, when the customer’s account next receives a direct deposit, these loans carry a great risk of trapping borrowers in cycles of long-term debt.
CBIS and other ICCR members have been in dialogue with Wells Fargo for several years and filed resolutions urging the bank to provide affordable and sustainable credit products for financially insecure customers. As a result of this engagement, the company adopted anti-predatory lending guidelines for its subprime mortgage business, and now, is discontinuing a potentially predatory product.
Said Dan Nielsen, CBIS director of socially responsible investing, “We commend Wells Fargo’s decision to discontinue its Direct Deposit Advance product, which we believed was not in the best interest of its customers. This move reflects a positive step by Wells Fargo and consequently, we will withdraw our resolution. We are optimistic that the company’s responsiveness to investors and other stakeholders on this important issue will carry over to other issues on which we are engaged.”
The Wells Fargo announcement comes on the same day that US Bank declared that it would be “winding down” its Checking Account Advance program. Regions Bank recently pulled a similar program.