Wells Fargo Partners with Warranty Service to Slap Mortgage Owners with Unauthorized Charges

You've just purchased property through a realtor you trust, having read everything carefully. You can still feel the excitement of new home ownership, as you go through the process of getting everything moved in and ready to start a new part of your life. You're ready to start making your payments on the mortgage, but you notice something is off. There's a charge, relatively small, that you did not authorize on the payment, that you did not agree to.

This happened to a Wells Fargo consumer who reported to the Federal Trade Commission (“FTC”), stating that the charges were from American Home Shield (“AHS”), a home warranty service provided with their mortgage. A month after calling to cancel the service, a $53.35 charge still continued to appear on their mortgage statement. Despite directly requesting both Wells Fargo and AHS to stop the unauthorized charges, the charge showed up on their monthly statement for the next five months.

Last month we related a practice by Wells Fargo using unauthorized charges as a pretext for wrongful repossession on automobile loans they financed. A pattern has emerged in their corporate culture, and the practice of charging consumers unauthorized fees for optional services extends outside of auto loans.

In response to a Freedom of Information Act request filed by investigatory firm the Capitol Forum, the FTC released thirty-two complaints filed in its Consumer Sentinel Network that were placed between the dates of January 1, 2009 and December 31, 2012. Many public complaints posted online echo those found in the FTC reports.

The majority of the complaints relate to unauthorized monthly charges for AHS home warranties Wells Fargo included on home mortgages, listed as “optional product” charges ranging from $33 to $69.11 per month. Some consumers hit with these charges had never heard of AHS before viewing their statements. One complaint claimed the consumer was “never contacted by AHS with any offer, they never sent any receipt or contract; but I was billed $43 extra on my mortgage bill by Wells Fargo.”

Efforts to cancel the charges led the consumer back and forth between the two companies, Wells Fargo and AHS. For example, when one customer requested Wells Fargo discontinue the charges, the bank told the customer they must contact AHS directly to correct their mortgage statement. With conflicting information and without anyone taking responsibility, consumers continued to incur the unauthorized charges.

This may be just the tip of the iceberg. A statement made to the media by a Wells Fargo spokesperson hints there's more beneath the surface. “Wells Fargo stopped marketing home warranties from American Home Shield, along with other optional products, to our mortgage customers in 2012 and has been discontinuing arrangements through which these products had been billed to customers through their monthly mortgage statements,” the statement reads. 

This raises more questions than answers. What “other optional products” were sold? And what does “has been discontinuing” mean? Has it been fully discontinued, or are some customers still being hit with charges every month? If their track record is any indication as the company is embattled with scandal after scandal, it's hard to give them the benefit of the doubt.

“It's hard to put your finger on what's going on,” says long-time consumer advocate and bankruptcy lawyer O. Max Gardner. “When you think you've seen it all, you see this stuff.”

At Humphreys Wallace Humphreys, we've seen this happen before, and the only way to keep this from happening to consumers in the future is bring the fight to the companies that practice it. If you have third-party charges on your mortgage payment that you did not authorize, contact us for a Free Case Review.