WHEELING AND DEALING: How Santander’s high pressure tactics hurt workers and auto loan customers
Santander's Call-Center Workers Bring Union Push to Washington
From Bloomberg Markets By Josh Eidelson and Gabrielle Coppola
July 21, 2017
Call-center workers at Santander Consumer USA Holdings Inc., concerned about what they deem aggressive collections tactics, are looking to unionize with the help of some big names on Capitol Hill.
The group of employees, who are working with the Communications Workers of America, met with Democrats in both chambers of Congress this week to raise their concerns that the company encourages them to extend and modify financially stretched consumers’ loans without explaining fully costs or risks -- allegations the company says “misrepresent our work environment.” The claims are laid out in a 25-page report authored by the AFL-CIO and the pro-labor non-profit National Employment Law Project that will be released publicly as soon as Friday.
“In an industry where products and services with the potential to cause consumer harm are widespread, Santander’s metrics and incentive system compel collections employees to use the aggressive collections tactics that they’ve developed as skills in their trade and while working at Santander,” the report says, alleging the auto lender’s system of rules and ratings encourages employees to speed through calls and push changes to loans that can be harmful to borrowers. They say unionization would allow them to fight the practices without fear of retaliation.
The company said the report inaccurately portrays its practices, adding that it “has zero tolerance for employee or dealer misconduct, and follows up on all documented employee complaints.”
“We were particularly dismayed that the authors chose to mischaracterize ordinary, customer-friendly business practices -- such as monitoring customer calls and providing scripts to our workers -- as evidence of improper conduct. These practices are not only expected by our regulators, but are widely considered standard elements of best-in-class customer service and consumer practices,” Santander Consumer spokeswoman Laurie W. Kight told Bloomberg News in an emailed statement.
The push for unionization at one of the biggest U.S. subprime auto lenders comes as bank sales practices are coming under intense scrutiny. Earlier this year Wells Fargo & Co. reached a deal to resolve a national class-action lawsuit over claims that employees may have opened more than 2 million deposit and credit-card accounts without customers’ permission since 2011. In the wake of that scandal, Santander employees and the unions looking to organize them have found a sympathetic ear in Washington.
“The behavior outlined in this report is troubling and, if true, shows that predatory practices boost profits for banks and their executives while hurting customers and workers,” Ohio Senator Sherrod Brown, the ranking Democrat on the Senate’s banking committee, said in an emailed statement after his office saw the report. “It’s critical workers are empowered to speak out if their company is harming them or its customers, and I urge Santander to respect the rights of these workers to elect union representation that will give them those protections.”
The unionizing push adds to pressure on Santander Consumer, the publicly traded U.S. unit of Spain’s Banco Santander SA that’s at the center of an American subprime auto boom that’s now showing some signs of trouble. With the amount of auto debt outstanding climbing more than 50 percent since 2010, more borrowers are falling behind on their car loan payments.
“Our customers and our employees are our top priorities, and we continuously review our consumer and business practices to ensure that we are providing responsible financing to consumers who want a vehicle to meet their personal needs,” Kight said.
The Communications Workers of America, or CWA, for years has been waging a long-shot effort -- backed by the federation UNI Global Union -- to organize U.S. tellers, personal bankers and call-center staff at major banks like JPMorgan Chase & Co. and Bank of America Corp. The banks have not acceded to CWA’s demands to make it easier to unionize. Santander’s long history of unionization in South America and Europe, as well as ongoing investigations into the auto industry’s lending practices, make it a prime target.
“Today’s report underscores the need for greater scrutiny and oversight of industry-wide debt collection practices,” New Jersey Senator Cory Booker said in an emailed statement, saying “stories of abuse among financial institutions at the expense of workers and consumers are all too common.”
Just as they did with Wells Fargo before that bank’s fake-account scandal, union organizers say Santander’s customers would be better served if workers were unionized and freer to rein in undue sales pressure.
“They’re governed by fear,” said Teresa Casertano, CWA’s global organizing coordinator. When represented by a union, “they have a voice on the job and they also have a voice in their industry in how customers are treated.”
The bank disputes those claims, saying it has an employee-friendly workplace where communication with management is encouraged. “While Santander recognizes and respects the rights of its employees to unionize or not, as they choose under U.S. law, these assertions and mischaracterizations are yet another attempt by union organizers to unfairly discredit Santander to further their own agenda,” Kight said.
Spain's Most Toxic Export
From its role in helping cause Puerto Rico's debt crisis, to its predatory subprime auto lending business, to its potential connections with a tax evasion/money laundering scheme, Banco Santander's business practices are toxic. It is time to ban Spain's most toxic export from business with our communities.
Banco Santander helped cause Puerto Rico's debt crisis by targeting the island with predatory loans that cost taxpayers billions of dollars. The bank was one of the underwriters on more than $60 billion in Puerto Rico's bonds. Now the Commonwealth is closing schools and hospitals and implementing other harsh austerity measures so that it can pay back its unsustainable debt load. Ironically, two men who were high-ranking Santander executives at the time that the bank sold the Commonwealth these toxic deals now sit on its federally-appointed Fiscal Control Board, known locally as "La Junta".
Read our partners' reports about Santander and Puerto Rico below.
Banco Santander executives' revolving door with Puerto Rico's debt management authority cost Puerto Ricans billions of dollars. Click here to read the report by Hedge Clippers and the Committee for Better Banks.
Carlos García, a former Santander executive who now sits on Puerto Rico's Fiscal Control Board, liquidated the island's infrastructure fund, diverting more than $1 billion that had been dedicated to essential water and sewer projects into a series of financial transactions that ultimately pushed the infrastructure fund toward insolvency. This has left Puerto Rico unable to modernize its water and sanitation systems, putting public health at risk. Click here to read the report by the Federación de Trabajadores de Puerto Rico, AFL-CIO, and Hedge Clippers.
Subprime Auto Loans
Santander Consumer USA Holdings, Inc. is the biggest packager of subprime auto loans in the United States.
- These are predatory loans that have egregious fees and interest rates that can leave borrowers with a $10,000 bill on a $750 car loan.
- In January 2017, the Mississippi Attorney General filed a class action consumer lawsuit alleging Santander originates loans it knows subprime customers cannot repay because it can turn a profit in as little as 3 to 6 months.
- Like the subprime mortgages that caused the foreclosure crisis, subprime auto loans typically target working class communities of color.
- Banco Santander was also significantly more likely than other auto lenders to make "liar loans" that did not verify borrowers' income.
- The bank reached a settlement to pay $25 million in fines related to its subprime auto lending business in March 2017.
Money Laundering Investigation
Spain's High Court has summoned seven current and former Santander bankers in connection with a money laundering investigation.
- Documents provided by the bank itself and by Spanish regulators showed that money was moved between accounts at Banco Santander, BNP Paribas, and HSBC, hidden from tax authorities.
- The investigation will help determine if this was part of an illegal money laundering scheme to help wealthy individuals evade taxes
Santander in the News
The Bankers Behind Puerto Rico's Debt Crisis
Michelle Chen | The Nation | 6.9.17
Liar Loans Dog Subprime Auto-Loan-Backed Securities
Wolf Richter | 5.24.17 | Seeking Alpha
Auto Lender Santander Checked Income on Just 8% in Subprime ABS
Matt Scully | Bloomberg | 5.22.17
Spanish court to question Santander, BNP bankers in HSBC tax probe
Angus Berwick and Jesus Aguado | Reuters | 5.3.17
Students Are Now Leading the Resistance to Austerity in Puerto Rico
Ed Morales | The Nation | 4.27.17
Santander Unit to Pay $25 Million Over Subprime Auto Loans
Erik Larson | Bloomberg | 3.29.17
Puerto Rican debt crisis enriches CEO charged with fixing it
Julie Pattison Gordon | Bay State Banner | 3.29.17
Fed orders Santander to improve oversight of its troubled subprime auto lender
Greg Robb | MarketWatch | 3.23.17
Two of Puerto Rico's New Overlords Are Accused of Helping Create Its Debt Crisis
Daniel Marans | Huffington Post | 12.17.16
Deep conflicts of interest plague Obama's newly appointed fiscal control board in Puerto Rico
Saqib Bhatti | The Hill | 9.9.16
Police search Santander's Madrid HQ in money laundering inquiry
Stephen Burgen | The Guardian | 6.3.16