September 29, 2016
The fallout from a Consumer Financial Protection Bureau action against Wells Fargo in response to retail bank employees who opened 1.5 million unauthorized accounts to attain unrealistic sales goals has trickled down to the card-not-present payments world, according to industry experts. The San Francisco-based financial institution, which was fined $185 million and forced to fire more than 5,000 of those employees in the wake of the scandal, is one of the largest credit card issuers in the world. As such, many of the fraudulent accounts established were credit card accounts. The exposure of the illegal activities perpetrated by Wells Fargo employees may have shed some light on a mystery noticed by subscription billers and their service providers, according to Grant Olson, founder of Great Authorization Opportunities, a Denver-based payments consulting business specializing in subscription and recurring billing.
“Card fraud has long been a major driver in declines of payment cards and automatic billers have noticed Wells Fargo’s relatively high decline rates in relation to other large banks such as Bank of America, Chase and Citibank,” Olson told CardNotPresent.com. “This trend has been puzzling considering that Wells Fargo has long been thought of as among the best-run banks. The revelation of millions of unauthorized accounts may have solved the puzzle as recurring card-not-present billers are seeing a much higher number of ‘invalid card’ declines from Wells Fargo. The customer confusion and churn surrounding the unauthorized accounts are likely contributors to the higher decline rates.”