Wells Fargo & Co.'s breakup with Bilt Technologies Inc. took another chaotic turn this week when the startup's customers who opted to close their accounts with the bank were surprised to receive credit cards anyway.
Wells Fargo officially rids itself of its money-losing partnership with Bilt on Saturday after nearly four years. Bilt, which launched a set of revamped offerings with new partners last month, had told nearly one million cardholders to pick one by Feb. 1, or automatically get a Wells Fargo card.
Then, scores of customers who opted to close their Wells Fargo account started getting the bank's Autograph card in the mail. Social media forums buzzed this week with surprised users. As one wrote: "Asked Bilt to cancel my Autograph card. Don’t really need it. Fast forward today, both cards got delivered."
The two firms raced to ensure customers in recent days that this was by design, and everything was going as planned. One Wells Fargo email seen by Bloomberg told recipients that the bank had received their request through Bilt to close their accounts and if they got a card in the mail "you can discard it."
The issue comes down to timing. In order to ensure that everybody who ultimately wanted a Wells Fargo card would get one in time, the bank had to start mailing cards on Jan. 26, according to people familiar with the matter. But Bilt's deadline wasn't until Feb. 1, and many cardholders had yet to make a decision.
So Wells Fargo mailed cards to all of them, even though the bank knew that many customers would likely opt to close their Wells Fargo credit lines in the intervening days, rendering the cards useless, the people said, asking not to be named discussing non-public information.
Beginning Jan. 26, Bilt displayed a notice on their platform that said "You may still receive a physical Wells Fargo Autograph Card in the mail. If you close through this process, you can ignore the card." As it turns out, not everybody reads the fine print.
Question-and-answer pages on each firm's website added to the confusion. Bilt's includes the question "Why am I receiving a Wells Fargo Autograph Visa Card from Wells Fargo?" The answer: "If you choose to keep your Wells Fargo account open, Wells Fargo will issue an Autograph Visa Card with a new card number for continued use."
Bilt said it gave customers a choice and let them know that if they opted out after that January date, they'd still receive an inactive Wells Fargo card because of production timelines.
"The important thing is their account closes as they requested, the card has no impact and can simply be destroyed or returned as it isn't active and cannot be used," a Bilt spokesperson said.
A Wells Fargo spokesperson declined to comment.
Points Play
Anything in the consumer banking realm can quickly become a touchy subject due to potential impact on customers' credit scores. Problems tend to become a lightning rod in Washington, invoking ire on both sides of the political aisle.
Nobody knows this better than Wells Fargo. A series of consumer scandals engulfed the bank a decade ago, which began with the revelation of millions of fake accounts. The lender only emerged from that chapter last year.
For Bilt, it's the latest hiccup in a messy rollout that already prompted an apology tour from Chief Executive Officer Ankur Jain. As a nascent startup, the company nabbed investments from Wells Fargo, Mastercard Inc. and others in 2021 at a $350 million valuation. That's since skyrocketed to a nearly $10.8 billion as of its most recent fundraise last year.
Wells Fargo and Bilt announced their partnership in 2022 with a novel proposition: earn points on rent payments. The credit card launched to great fanfare, including a splashy party in New York City that counted then-Mayor Eric Adams and model Cara Delevingne among guests.
The Bilt card quickly became part of the points-and-miles zeitgeist, but also proved to be a bad deal for Wells Fargo. The path to profitability for the bank was contingent upon cardholders carrying balances and using their Bilt cards for transactions other than rent -- neither of which were happening enough to make the math work, according to the people familiar with the matter.
Bilt's Pivot
The relationship between the two firms soured, and last year, Bilt said it would end its partnership with Wells Fargo and launch new offerings with the help of financial-technology company Cardless.
When co-brand credit card partnerships end, it typically plays out in one of two ways. A new lender could come in and buy the existing portfolio, as JPMorgan Chase & Co. just did when it agreed to replace Goldman Sachs Group Inc. as the partner for Apple Inc.'s credit-card business. Other times, the lender converts the card to one of its proprietary offerings, as Synchrony Financial did years ago with its Toys "R" Us card.
Wells Fargo's card with Bilt is something of a hybrid. Its new partners, Cardless, Fidem Financial and Column, didn't buy the existing portfolio; opting instead to work with Bilt to launch an entirely new product. So from Wells Fargo's standpoint, the road map is more like Synchrony and Toys "R" Us than Goldman Sachs and Apple.
Bilt's new product suite -- dubbed "Bilt 2.0" -- includes a trio of cards, two of which have an annual fee. It also reshaped its rewards system, prompting outrage among customers over its complexity.
In an email to customers two days after the launch, Jain addressed the "important reality" behind the changes: "It is probably not a surprise to any of you, but if members only purchase four bananas and earn free rent points, it doesn't allow us to sustain such a rich value proposition for everyone."