From: The Honorable Keith Ellison
Incentive Pay Practices Harm Workers and Customers: Sign Letter by
Signators: Reps. Capuano, K. Clark, DeSaulnier, Edwards, Foster, Fudge, Grijalva, Honda, Keating, Lee, McGovern, Meeks,
Moore, Nadler, Pocan, T. Ryan, Serrano, Schakowsky, Slaughter, A. Smith, Takano, and F. Wilson
Please join our letter to the Consumer Financial Protection Bureau (CFPB) urging stronger action to prevent the use of aggressive sales quotas, low base-wages, and related
practices by financial institutions which can lead to consumer harm. Aggressive sales quotas can force front-line workers to push inappropriate banking products on customers in order to earn enough to cover their bills or avoid being fired, while unwitting
customers can end up in serious financial peril as a result. In our letter, we call on the CFPB to continue to act to curb aggressive sales quotas, low base-wages, and related practices.
The CFPB Supervision and Examination Manual (October 2012) clearly states that financial institutions must avoid creating incentive programs that “encourage employees, third-party
contractors and service providers to engage in unfair, deceptive or abusive acts or practices, particularly with respect to product sales, loan originations and collections.” However, financial institutions continue to incent workers to sell products to customers,
even if a product is not in the best interest of the customer. Recently, the CFPB fined Santander N.A., Wells Fargo and Citigroup Inc. for such practices.
In a recent report titled Banking
on the Hard Sell, the National Employment Law Project (NELP) exposes the impact of sales quotas imposed at several of our nation’s largest banks. These quotas, combined with low base-wages and bonuses based on sales, often force front-line bank workers
to choose between serving their customers’ needs and being able to put food on the table. In addition, these aggressive sales tactics harm bank customers who can be charged for products they neither need nor want.
We hope you will join this letter urging the CFPB to continue and expand its work to protect American workers and consumers. To join the letter, please contact Carol.Wayman@mail.house.gov at
5.4755 in Mr. Ellison’s office.
Keith Ellison Raúl M. Grijalva
Member of Congress Member of Congress
Mark Takano Frederica S. Wilson
Member of Congress Member of Congress
Dear Director Cordray:
We write to urge the Consumer Financial Protection Bureau (CFPB) continue to act to curb aggressive sales quotas, low base-wages, and related practices. We believe more needs
to be done to end incentive compensation practices that harm customers and workers.
We appreciate the CFPB’s work so far to identify and remedy consumer harm caused by sales quotas. The CFPB Supervision and Examination Manual (October 2012) clearly states
that financial institutions must avoid creating incentive programs that “encourage employees, third-party contractors and service providers to engage in unfair, deceptive or abusive acts or practices, particularly with respect to product sales, loan originations
Recently, Wells Fargo Bank was fined $185 million in penalties for their employees victimizing customers by setting up millions of unauthorized accounts to boost their sales
outcomes. The CFPB also ordered Santander N.A. to pay a $10 million fine because the bank’s telemarketing vendor deceptively marketed overdraft services and enrolled bank customer in the overdraft product without their consent. The CFPB found that telemarketers
who met certain sales goals received additional compensation which led to these fraudulent activities. In addition, last year, Citigroup Inc. agreed to pay a $770 million fine to settle allegations that it misled customers of its credit cards to purchase products
they did not need. Again, employee payment incentives contributed to this unfair treatment of consumers.
While we are pleased to see these enforcement actions, we do not think enough has been done to fix incentive pay systems for employees, vendors and other individuals hired
by regulated financial institutions. A recent report entitled Banking on the Hard Sell, released this summer
by the National Employment Law Project (NELP), finds that sales quotas imposed at several of the nation’s largest banks often force front-line bank workers to choose between serving their customers’ needs and being able to put food on the table. In particular,
the report details how the intense pressure that workers face could undermine the protections afforded by the Fair Debt Collection Practices Act (FDCPA) and CFPB rules protecting consumers against unfair, deceptive, and abusive practices.
We believe that an honest day’s work should be rewarded with an honest day’s pay. It is therefore very troubling that nearly one-third of all retail banking workers earn less
than $15 per hour and, as evidenced in NELP’s report, often have trouble making ends meet unless they earn full bonuses monthly. Additionally, instances of bullying and threats of termination related to sales quotas can increase job insecurity and place additional
stress on workers. This stressful and punitive pay structure not only harms workers, but also jeopardizes the CFPB’s consumer protection efforts. These pressures force front-line workers to push inappropriate banking products on customers.
Given the prevalence of the problem, we urge you to continue to address quotas in enforcement actions when they play a role in violations of consumer finance law and increase
its supervisory attention to the risk of quotas throughout the industry.
Thank you for your ongoing efforts to protect American consumers from unfair, deceptive and abusive financial practices. Your tireless work has already returned more than
$11 billion to American consumers and put in place strong new rules that will protect consumers for years to come. The CFPB’s outstanding work to protect consumers should not be undermined by compensation structures that incentivize behavior contrary to the
letter or intent of consumer protection rules established by the CFPB or other banking regulators. We are grateful for your consideration of our request to stop abusive incentive compensation systems. We look forward to continuing to work with you to strengthen
our financial system and ensure that it works for all Americans.