This past week my expenses exceeded my income and my account balance went negative. It's not because I'm living beyond my means - buying all sorts of stupid nonsense. My spending is not out of control. It's because my means have dropped significantly below the cost of living. This time it was the gas bill ($238.61) and the phone bill ($77.95) - both auto-pay. If I could have avoided it, I would have.
I know it's my fault. It's my job to make enough money to pay the bills. I won't go into all the methods that Wells Fargo Bank uses to steer people into overdrafts. And, I know that the official policy of Wells Fargo Bank is to aggressively take advantage of such situations and make as much money as possible from overdraft fees. And, it's common knowledge that our government (both state and federal) allows banks to do this with impunity. In fact, the government facilitates this activity. But, this report isn't about any of that. I'm writing this report to warn people about new tactics that Wells Fargo Bank used in my recent situation in an attempt to prolong the overdraft feeding frenzy.
Three deposits were made to my account since it went negative. The first one was two days ago, the second was yesterday. But, neither of these brought the balance above zero. Combined, they exceeded the original overdrafts (gas and phone bills) with some margin to spare. But, they didn't cover the overdraft fees ($455) for every little subsequent transaction (several small postage purchases). The third deposit was today and it did restore the account. All three deposits were from my merchant bank account (credit card processing). Basically, these were from credit card sales that I had earlier in the week. There have been six such deposits this month - all from the same source. Over the many years that I have operated my business, there have been several thousand such deposits.
Here's where the new scam starts:
1. I received a call from a Wells Fargo Bank representative this morning. She wanted to let me know that there was an unusual deposit in my account. She explained that the bank had flagged it as suspicious and suspected that it was some kind of fraudulent activity. They were going to deny it if I hadn't answered the phone and verified the source. Lucky me! If I hadn't answered the phone then this overdraft feeding frenzy would have continued through the weekend and well into the next week as I tried to get the merchant bank to re-submit the deposit!
Who ever heard of fraudulent deposit transactions? This is a new one on me! And, it's pretty difficult for me to believe that nobody noticed most of the other deposits in my account were from the exact same source.
2. The second thing that she tells me is that my debit cards have been cancelled. I didn't report them lost or stolen. There were no suspicious or fraudulent purchases. So I asked her why they did this. She explained that it was done because my account was overdrawn. They have never done this on any previous overdraft situations so I asked her why they did it this time. Why didn't they just deny payment? She claimed that there is a 'law' which prohibits them from denying payment for a debit card transaction - even when the account is empty. The only way for them to stop transactions is to cancel the cards. Well, this is complete nonsense and I told her so. There is no such law. The whole system is set up to allow for charges to be denied. That's why debit card transactions are labeled 'pending' in the account for the first two days. The money doesn't actually transfer until the merchant does a batch settlement and the charges are processed through the system.
She went on to tell me that I could open up a different kind of checking account with a debit card that allowed them to deny payment if the account was empty. Somehow, this 'law' was able to tell the difference between these two types of accounts. What she described sounded a lot like a 'pre-paid credit card', which has a considerable amount of fees and overhead. That's when I realized that she was going to try and sell me yet another predatory financial product so I told her that I wasn't interested.
It puzzled me for quite some time why Wells Fargo Bank would cancel my cards and use such a stupid lame excuse. Then it occurred to me. The overdraft fee is posted long before the actual money is transferred. 'Pending' transactions can't be voided or modified after the card is canceled. If they didn't cancel the card, then I could have called up vendors and asked them to void the transactions and accept a different card or form of payment. Their precious overdraft fees would have vaporized into nothing.
3. Now, I've had my debit cards canceled before. It's a major hassle. I use them with most of my suppliers and service providers. I can't order supplies and goods that I need to fill orders. Several on-line services receive payment through these cards. My business comes to a screeching halt and I can't make money until I receive the new cards. My bank account shrinks and, you guessed it, becomes overdrawn again. So, getting these cards sent out quickly is paramount to me. Therefore, I insist that she verify the address. She reads back an address that I haven't used in nearly ten years! I know that they have my current address because I receive my bank statements and my payments are accepted (phone orders require address and zip code verification). In fact, replacement cards have been sent to the new address in previous card cancellation episodes. So, it's pretty difficult to imagine why Wells Fargo was all primed to send my new cards to a bogus address. Beyond doubt, their arrival would have been hopelessly delayed.
Well, at this point I wasn't sure what to think. I suspected that she was not a real Wells Fargo Agent so I challenged her authority. She provided confidential information verifying to my satisfaction that she was the genuine article. Then she reads the correct address, verifying that she knew where to send the cards all along. It's hard for me to believe that this wasn't yet another deliberate tactic.
You would think that banks would be treading pretty lightly these days. Apparently not so with Wells Fargo Bank. The malevolent greed which created the banking crisis is still alive and well creating more scams like the ones I have described here. Beware of Wells Fargo Bank, they are constantly dreaming up new and clever tricks to use against their customers.