SAN FRANCISCO — Six weeks after announcing plans to discontinue personal lines of credit for its customers, Wells Fargo confirmed Thursday it will tweak the widely unpopular tactic.
In an about-face, the San Francisco-based financial services company will, instead, maintain availability of those credit lines for people who actively used them or wish to reactivate old ones but will not offer the product to new customers, CNBC reported.
Boom. After @CNBC reported on @WellsFargo's plans to shutter all personal lines of credit last month, the bank decided to reverse its decision. Customers & @SenWarren had complained about the move. 👏👏https://t.co/fQyXOV4vXv
— Hugh Son (@Hugh_Son) August 18, 2021
According to the network, 60% of Wells Fargo customers with personal lines of credit actively used them within the previous 12 months.
Meanwhile, a person with direct knowledge of the situation told CNBC that inconvenience was a primary complaint of affected customers, but the potential negative impact on customers’ credit scores fueled most of the backlash.
According to a statement issued by Wells Fargo, the company began communicating Tuesday with all customers who received the initial 6-page letter informing them of the credit line discontinuation.
>> Related: Wells Fargo discontinuing all personal lines of credit
The move comes after the Federal Reserve’s 2018 decision to bar Wells Fargo from growing its balance sheet until it fixed compliance issues that stem from the bank’s fake accounts scandal, USA Today reported. The bank announced in 2020 that it would no longer extend home equity lines of credit, and then said it would halt making automobile loans to most independent car dealerships, the newspaper reported.
Wells Fargo paid $3 billion in February 2020 to settle investigations into fake accounts by the Justice Department and the Securities and Exchange Commission, The Wall Street Journal reported.
Read the complete Wells Fargo statement below:
“As part of our strategic review of businesses last year, we determined that our suite of other consumer products serve our customers better than personal lines of credit. As a result, we ceased opening these lines in May 2020, and recently notified customers that we planned to close existing lines. We heard feedback from our customers and that feedback is very important to us; we are responding by ensuring customers can keep these lines of credit open.
“For customers who have been using their lines, we are informing them that their lines remain open and they can continue to use them. For customers whose accounts have been inactive for the past 12 months, if they would like to keep their lines open, they can call us or simply use their line. For those inactive customers who do not activate their lines in one of these ways, accounts will be closed on December 2, 2021.
“Beginning August 17, we have been communicating with all customers who received the earlier letters to inform them of this change, using both email and written letters.”
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