Xavier Einaudi did not want to wait for Wells Fargo to send him a check.
The bank informed Mr. Einaudi that it was closing all 13 of the checking accounts it provided his roofing company, CRV Construction, for a reason it called “confidential.” The letter said the accounts would be closed on June 27, and he would be mailed a check for the balance in his accounts.
Mr. Einaudi went to his branch and collected the money, so he did not have to wait for a check to arrive in the mail. But the accounts did not close on the preset date.
For weeks after the date the bank said the accounts would be closed, it kept some of them active. Payments to his insurer, to Google for online advertising and to a provider of project management software were paid out of the empty accounts in July. Each time, the bank charged Mr. Einaudi a $35 overdraft fee.
Mr. Einaudi called the bank’s customer service line. He went to his local branch. Nobody could help him. “They told me, ‘The accounts are closed out — we cannot do anything,’” he said.
By the middle of July, he owed the bank nearly $1,500.
“I don’t even know what happened,” he said.
Current and former bank employees said Mr. Einaudi got charged because of the way Wells Fargo’s computer system handles closed accounts: An account the customer believes to be closed can stay open if it has a balance, even one below zero. And each time a transaction is processed for an overdrawn account, Wells Fargo tacks on a fee.
The problem has gone unaddressed by the bank despite complaints from customers and employees, including one in the bank’s debt-collection department who grew concerned after taking in an estimated $100,000 in overdraft fees over eight months. It is not clear how many people have been affected, but aggrieved customers have brought complaints to the Consumer Financial Protection Bureau, griped on the discussion sites Reddit and Quora and voiced their displeasure through the “Community” section of Wells Fargo’s website — a public comment feature that is now disabled.
A spokesman for the bank said he could not comment on specific accounts for privacy reasons, but said the bank reviews accounts to protect customers and was “committed to doing so in ways that minimize the risk and impact to our customers.”
“As a company, we are focused on continually improving this process,” said the spokesman, Jim Seitz.
Wells Fargo takes employee complaints seriously, Mr. Seitz said, and encourages clients to engage directly with it to fix problems. “Wells Fargo works hard to foster a culture that is centered on doing what is right for our customers and exhibiting high ethical standards and integrity,” he said.
Wells Fargo has been trying to rebuild its credibility after a series of scandals. The bank has paid more than $15 billion in settlements since the financial crisis to resolve investigations into misdeeds including the creation of fraudulent accounts in customers’ names and requirements that auto-loan borrowers pay for unnecessary insurance.
The bank is searching for a new chief executive after its previous chief became a lightning rod for critics in Congress, and it is still operating under restrictions imposed by the Federal Reserve that bar it from increasing its assets until it improves its oversight practices.
Wells Fargo’s customers have complained about reopened accounts, but banks can have a good reason to reactivate an account. Bank of America and JPMorgan Chase warn their customers — albeit in fine print — of the possibility that their accounts could be reopened if, for example, the bank receives a deposit bound for a closed account.
When Wells Fargo decides it will close an account, it usually informs customers in a letter that lists two important dates. The first is the date deposits can no longer be accepted. The second, which is two weeks after the first, is the date after which no more withdrawals will be honored and the account will be closed.
“Any payments you make to others that are automatically withdrawn from your accounts will be discontinued after your accounts are closed,” the letter says. The New York Times reviewed four such letters.
But two current and two former employees said Wells Fargo had set up its computer system to keep such accounts open if they have a balance — whether positive or negative — even after the closing date.
Most banks program their systems to stop honoring transactions on the specified date, but Wells Fargo allows accounts to remain open for two more months, according to current and former employees. Customers usually learn what happened only after their overdrawn accounts are sent to Wells Fargo’s collections department.
If the customers do not pay the overdraft fees, they are reported to a national database like Early Warning Services, which compiles names of delinquent bank customers. That often means a customer cannot open a new bank account anywhere, and getting removed from the lists can take hours’ worth of phone calls.
One current Wells Fargo employee who spoke on the condition of anonymity said two workers in a debt-collection office complained about the problem through the bank’s anonymous ethics hotline late last year. One, a member of a 40-person office, had collected an estimated $100,000 as a result of the practice, making up 5 percent of the employee’s total collections over an eight-month period.
There are several ways the balance of an ostensibly closed account can fall below zero. They often involve an unexpected payment from the account, such as a gratuity later tacked on to a restaurant bill paid with a debit card. But fraud is another common culprit, according to current and former employees.
Matthew Valles, a former employee who is suing the bank claiming he was wrongfully fired, said he tried to raise an alarm about the overdraft problem in 2017, because it seemed to most frequently affect fraud victims, who often had little or no money to begin with. And a current employee recalled receiving a complaint from a fraud victim who said he was told he owed $4,000 in fees after his checking account was closed.
Fraud victims are particularly vulnerable to the overdraft problem: Those that are tricked into depositing bogus checks, for example, can easily end up having their accounts closed with a negative balance because they unwittingly spend the money before the fraud is discovered.
Wells Fargo has faced scrutiny before over its handling of accounts of fraud victims. The bank disclosed in August 2017 that the federal consumer bureau was investigating it for closing fraud victims’ accounts without determining whether they had done anything wrong.
The overdraft problem hits those who are financially challenged the hardest, yet they are the least likely to realize they have been wronged, said Chris Peterson, a law professor at the University of Utah who is also a senior fellow at the Consumer Federation of America.
“They don’t know who to complain to,” he said. “They don’t know how to explain what the problem was, and they don’t have the time and resources to deal with getting involved.”
Mr. Einaudi still does not know why his accounts were closed, despite repeated requests since early May. He knew he was incurring overdraft penalties only because the inaccessible business accounts were still visible when he logged into his personal accounts.
Another Wells Fargo customer, Anna Tchorbadjiev, is receiving calls from the bank about debits and overdraft penalties it says she owes since her checking account was closed in February.
Ms. Tchorbadjiev, 23, said she learned her account had been closed when she visited a Wells Fargo branch in Manhattan to withdraw some cash before brunch with friends. (Mr. Seitz said: “We take appropriate steps to notify our customer of account closures in advance.”)
Ms. Tchorbadjiev, a freelance assistant to real estate brokers who also works as a model, had $40,000 in her account. She refused to leave without the full amount. Eventually, bank employees handed her a paper bag containing stacks of bills.
“Just a straight-up paper bag like people use for lunch,” Ms. Tchorbadjiev said. “It was almost like something out of a movie.”
Weeks later, representatives of Wells Fargo began calling. They said Ms. Tchorbadjiev owed $3,000 in debits and overdraft fees incurred since her visit, and the bank had reported her to a national database.
Ms. Tchorbadjiev said it took her a month of phone calls to get the report removed so she could set up an account elsewhere. In the meantime, the bank keeps calling about what it says she owes.
“I’m not going to deal with them,” Ms. Tchorbadjiev said.