UCF and other investors celebrate end of bank payday lending product

January 22, 2014

After several years of persistence of shareholders including United Church Funds calling for the end to Wells Fargo predatory lending program, our efforts have paid off.

Years of shareholder resolutions and dialogues promoting more responsible lending products have turned to today members of the Interfaith Center on Corporate Responsibility (ICCR) wishing to commend Wells Fargo 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.

ICCR members have been in dialogue with Wells Fargo since 2009 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.  But Wells Fargo continued to offer the cash advance product and was one of only a few major banks to do so.

 
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