Consumer complaint received 2020-01-11
Product: Credit card or prepaid card — General-purpose credit card or charge card
Issue: Problem when making payments — Problem during payment process
Company: WELLS FARGO & COMPANY (PA)

In summary, this narrative concerns Wells Fargo 's payment allocation practices on a personal credit card with multiple promotional rate balances with identical terms that expire at different times. Wells Fargo distributes payments among all of the balances in a manner deliberately engineered to make it impossible to pay off the balance expiring the soonest prior to expiration without also paying off the entire account in full. In addition, several payments were egregiously applied primarily to the newest balance ( i.e. the last to expire ). 

Clearly this is designed to maximize Wells Fargo 's opportunity to generate income on transactions of this nature. When a consumer is forced to pay the total account balance to avoid interest charges on one balance expiring sooner than others, it also effectively revokes the duration of the promotional period promised for each transaction posting to the account after the initial one. These payment allocation practices were not described in any disclosures, on the credit access devices ( " Superchecks '' ), on the statements, or in the terms and conditions of the account. Although there is presently no law in place to govern how payments are allocated when all balances on a credit card account are at the same interest rate, Wells Fargo is not in line with its peers ( the other three " Big Banks '' ), which apply payments to multiple same-rate balances either in the order they post to an account or the order in which they expire. 

In detail, I conducted a total of five transactions with identical terms ( 15 months at 0 % with a 4 % transaction fee ) for varying dollar amounts on separate occasions. No other transactions have taken place on the account aside from fourteen timely payments totaling {$2300.00} ( as of XX/XX/XXXX ). It was when I made this XX/XX/XXXX payment that I discovered how payments had been applied to the account. 

Here is the complete chronological breakdown per the figures shown on each statement. Payment # 4 shows nothing going to the newest balance, but payment # s 5, 6, and 7 demonstrate where most of the payment is nefariously applied to the newest balance. 

Balance # 1 - XX/XX/XXXX for {$4100.00}, expiring XX/XX/XXXX Balance # 2 - XX/XX/XXXX for {$1000.00}, expiring XX/XX/XXXX Payment # 1 -  XX/XX/XXXX for {$350.00} : {$280.00} to balance # 1, {$70.00} to balance # 2 Payment # 2 - XX/XX/XXXX for {$170.00} and Payment # 3 - XX/XX/XXXX for {$170.00} ( same billing cycle ) : {$280.00} to balance # 1, {$70.00} to balance # 2 Balance # 3 - XX/XX/XXXX for {$1500.00}, expiring XX/XX/XXXX Payment # 4 - XX/XX/XXXX for {$360.00} : {$280.00} to balance # 1, {$72.00} to balance # 2, {$0.00} to balance # 3 Payment # 5 - XX/XX/XXXX for {$100.00} : {$23.00} to balance # 1, {$5.00} to balance # 2, {$70.00} to balance # 3 Balance # 4 - XX/XX/XXXX for {$1500.00}, expiring XX/XX/XXXX Payment # 6 - XX/XX/XXXX for {$200.00} : {$64.00} to balance # 1, {$16.00} to balance # 2, {$29.00} to balance # 3, {$89.00} to balance # 4 Balance # 5 - XX/XX/XXXX for {$2000.00}, expiring XX/XX/XXXX Payment # 7, XX/XX/XXXX for {$200.00} : {$43.00} to balance # 1, {$10.00} to balance # 2, {$19.00} to balance # 3, {$19.00} to balance # 4, {$100.00} to balance # 5 Payment # 8, XXXX for {$140.00} : {$50.00} to balance # 1, {$12.00} to balance # 2, {$22.00} to balance # 3, {$22.00} to balance # 4, {$31.00} to balance # 5 Payment # 9, XX/XX/XXXX for {$100.00} : {$35.00} to balance # 1,  {$9.00} to balance # 2, {$16.00} to balance # 3, {$16.00} to balance # 4, {$22.00} to balance # 5 Payment # 10, XX/XX/XXXX for {$100.00} : {$35.00} to balance # 1, {$9.00} to balance # 2, {$16.00} to balance # 3, {$16.00} to balance # 4, {$22.00} to balance # 5 Payment # 11, XX/XX/XXXX for {$100.00} : {$35.00} to balance # 1, {$9.00} to balance # 2, {$16.00} to balance # 3, {$16.00} to balance # 4, {$22.00} to balance # 5 Payment # 12, XX/XX/XXXX for {$100.00} : {$35.00} to balance # 1, {$9.00} to balance # 2, {$16.00} to balance # 3, {$16.00} to balance # 4, {$22.00} to balance # 5 Payment # 13, XX/XX/XXXX for {$100.00} : {$35.00} to balance # 1, {$9.00} to balance # 2, {$16.00} to balance # 3, {$16.00} to balance # 4, {$22.00} to balance # 5 Payment # 14, XX/XX/XXXX for {$100.00} : {$35.00} to balance # 1, {$9.00} to balance # 2, {$16.00} to balance # 3, {$16.00} to balance # 4, {$22.00} to balance # 5 Payment # 15, XX/XX/XXXX for {$100.00} : To be determined on XX/XX/XXXX statement As of the XX/XX/XXXX statement, only {$1200.00} ( or 54.17 % of all payments ) has been applied to balance # 1, bringing it from {$4100.00} to {$2900.00}. Had payments been allocated as I anticipated, balance # 1 would instead be {$1800.00}, and the other balances would remain at their original dollar amounts. 

After reviewing all statements, Wells Fargo 's website, and 12 CFR Part 1026 ( Regulation Z ), 1026.53 Allocation of payments, I contacted Wells Fargo by phone on XX/XX/XXXX to determine 1 ) whether they accept requests to allocate payments in a specific way, 2 ) whether there is a written policy in place governing how payments are allocated when there are multiple balances at the same interest rate, and 3 ) whether a research request could be submitted to retroactively reallocate previously posted payments. 

I spoke with three Wells Fargo associates and was able to determine only that Wells Fargo does not accept requests for specific methods of payment allocation. The first associate offered the solution of waiting until the day after the promotion expired to make a payment, invoking the CARD act 's payment order rules regarding balances at different interest rates. This action would still allow any remaining balance to be subject to interest. It also does not address that the remaining balance would be higher than anticipated due to the allocation method. The third associate, in the " executive office, '' was not able to locate a policy regarding payment allocation for multiple balances at the same interest rate and could not confirm whether payments could be reallocated. I specified to this associate that had I been aware of how payments would be allocated and, with no option to modify this, I would choose to conduct only one transaction. I informed this associate that I would be submitting the case to the CFPB. The associate provided a phone number and case number and advised that I would be contacted at a future date. 

On XX/XX/XXXX, I called requesting a status update on my case. The associate advised that it could take " up to a month '' for a response. As of this submission on XX/XX/XXXX - over five weeks since my initial contact - I have not received a response, and there are just over four weeks remaining until the first balance is set to expire. 

In the meantime, I conducted additional research and was able to locate numerous other posted CFPB complaints from consumers who faced the same/similar issue with Wells Fargo ( the complaint numbers are : XXXX, XXXX, XXXX, XXXX, XXXX, XXXX, XXXX, and XXXX, perhaps among others ), and also located a potentially relevant description of payment allocation on Wells Fargo 's website. 

The description, located at https : //retailservices.wellsfargo.com/customer/faqs.html, states : " Your payment applies first to the minimum payment due ( including past due amounts ) for that billing cycle. Anything over the minimum payment due generally applies first to No Interest if Paid in Full ( deferred interest ) promotions in the last two billing cycles before the expiration date of the promotion ( when applicable ) ; then to regular term balances with the highest APR to the lowest APR ; and then to all other sub-accounts based on expiration date. If you'd like to know how payments apply to your specific account, call us at XXXX, Monday - Friday, XXXX XXXX  to XXXX XXXX Central Time. '' It is unclear whether this policy applies only to Wells Fargo 's co-branded retail cards and does not define the term " sub-account. '' It does indicate in this instance that payments can be applied " based on the expiration date. '' However, it also implies that " your specific account '' may have an entirely different set of payment allocation parameters than another. But lastly and perhaps most importantly, it provides that a consumer is able to determine how payments apply to a specific account. Wells Fargo was thus far unable to do this, aside from reiterating the basic provisions of the CARD act.

Wells Fargo may currently be in compliance with the law, but the payment allocation practices described in detail here are, I feel objectively, both abusive and deceptive to consumers. At a minimum, Wells Fargo should be able to explain their methodology when asked ( per  their own language quoted above ). At a minimum, the CFPB should require notification that payments can be applied in no or any particular fashion when there are only multiple same-rate balances on a credit card account. 

A secondary, unrelated issue also became apparent while poring over my account. To my knowledge, this did not impact me directly, and I did not bring it to Wells Fargo 's attention, but I believe this should be made known. Several of my statements were not consistent with the Minimum Payment calculation as specified in the account agreement : " Minimum Payment. Your Minimum Payment Due includes any amount past due plus the greater of : - The sum of late, returned check, returned payment, rush plastic, and annual fees and interest billed during the Billing Cycle for which the Minimum Payment is calculated plus 1 % of the New Balance shown on the billing statement ; or - {$25.00} ( or the entire balance on the Account if the New Balance is less than {$25.00} ). '' Examples : - the minimum due for XX/XX/XXXX, on a 0 % balance of {$5200.00}, was {$250.00}. 
- the minimum due for XX/XX/XXXX, on a 0 % balance of {$4800.00}, was {$97.00}. 
- the minimum due for XX/XX/XXXX, on a 0 % balance of {$4500.00}, was {$90.00}. 

The minimum due for XX/XX/XXXX appears to be 1 % of the balance plus the dollar amount of the transaction fees associated with the first two balance transfers ( {$160.00} and {$40.00} ). These fees are included in the 0 % interest balance and should not have been included in the minimum due. Subsequent transaction fees were not included in the minimum due following the closing of those statement cycles ( for example, the XX/XX/XXXX balance transfer of {$2000.00} had a transaction fee of {$80.00}, which was not added to the minimum due for XX/XX/XXXX ). Then, the minimums due for XX/XX/XXXX and XX/XX/XXXX represent 2 % of the balance rather than 1 %. It is not apparent why these three billing cycles required higher minimums due, when all following statements to present day are in alignment with the posted formula.