I knew I hated WF for a reason

[quote]December 31, 2007

The History of Wells Fargo and Payday Lending

If you are like many Americans, then you probably don’t do too much thinking about Wells Fargo. The massive bank, which has offices throughout the nation, is a financial institution of the grand old tradition, widely considered to be honest and reputable. Certainly, almost no one would think to connect Wells Fargo to payday loans. The controversial short-term, high-interest personal loans are, of course, considered “alternative” or “fringe” credit options, and exist well below the comfort level of many citizens who consider themselves upstanding. Yet Wells Fargo has had ties to the national cash advance loan industry almost since its inception some fifteen years ago, in a variety of ways.

Did you know, for example, that Wells Fargo finances payday loan merchants? The bank, which has been involved in American consumer lending since the days when cash deposits crossed the Wild West in stagecoaches, is the backer for several large cash advance loan companies. Basically, Wells Fargo puts up the money that these fast cash loan companies extend in the form of short-term personal loans to consumers – they are the lender to the lender. Many big financial institutions such as JP Morgan Chase and Bank of America also have a hand in the very lucrative industry of payday loans this way.

However, it’s unlikely that either of these companies ever offered payday loans themselves. Up until 2005, when the company voluntarily discontinued the practice due to widespread scrutiny, Wells Fargo offered something called a Direct Deposit Advance, which was a form of refund anticipation loan (RAL) – more commonly called a cash advance. The bank charged ten percent interest to lend customers money that they were anticipating in the form of direct deposit, thus compelling people to pay interest on their own money.[/quote]