Most of the drama this week was in Washington. The healthcare debate turned into something that was one aria short of a full-blown opera, and the entering communications director brought new meaning to the term “open dialogue with the media.” For all the speechifying and the headlines, scripted programs on television networks, cable and streaming services weren’t half as entertaining as the actual news from D.C. this week.
But if action was what one was looking for — where things actually progressed or were accomplished — payments and commerce would have been a better bet for news consumption. Or at least a less frustrating one.
Wells Fargo’s summer of discontent stretched into another week with the dual revelations of data security issues and an internal investigation that found a whole new class of customers had been fraudulently signed on for unwanted services; Stripe made a big acquisition to expand its menu of services and North Korean state-sponsored hackers have hit reset on their cybercrime ambitions.
Wells Fargo’s Rough Week
Things got off to a bumpy start this week for Wells Fargo, with the revelation that it may have allowed an unauthorized release of the data on tens of thousands of clients’ bank accounts. Regulators are reportedly inquiring about how a lawyer for wealthy customers of Wells Fargo came to access so large a trove of customer information.
According to reports, the data was accidently given to the attorney as part of an ongoing lawsuit. Wells Fargo has disclosed that the accounts came from a branch of its brokerage business in the northeastern U.S.
Regulators have reportedly informally reached out to the attorneys involved in the lawsuit underlying the release of information to figure out how the data breach happened.
“Wells Fargo takes the security and privacy of our customers’ information very seriously,” the banking firm said in a statement according to the report. “We are currently taking legal action to ensure the additional data is not disseminated, and we are requesting its rapid return. We continue to thoroughly investigate this matter and will take the proper steps, including corrective action, based on the outcome of our investigation.”
That is how the week started for Wells Fargo — and things went downhill from there.
On Friday, news broke that Wells Fargo had — by its own admission — signed 800,000 auto loan customers up for insurance that they did not need — and did not report wanting. Some of those customers are still paying for that insurance to this day, according to an internal report prepared for the bank’s executive team.
The 60-page report, which The New York Times has reportedly seen and reviewed, also indicates that targets of Wells Fargo’s latest breach of consumer trust included military service members on active duty.
Wells Fargo has confirmed that the abuses detailed in the report occurred and that it will be doing whatever it can to reinstate customer trust.
“We have a huge responsibility and fell short of our ideals for managing and providing oversight of the third-party vendor and our own operations,” Franklin R. Codel, head of consumer lending at Wells Fargo, said in an interview. “We self-identified this issue, and we made the right business decisions to end the placement of the product.”
Consulting firm Oliver Wyman prepared the document after reviewing insurance policies sold to the banking firm’s customers from January 2012 through July 2016. The insurance, which Wells required, was more expensive than auto insurance customers already had — though it was not markedly different in terms of coverage.
The insurance is suspected to have pushed over a quarter million customers into delinquency and resulted in almost 25,000 vehicle repossessions.
Should be a full week for the PR team.
Stripe’s Newest Acquisition
After a long partnership, Stripe has officially acquired Payable in an effort to bolster the tax reporting tools it has on offer for its market business customers through its Stripe Connect product.
Stripe says that its Connect product makes it easier for businesses to both process payments from customers and make payments to contractors and vendors.
“We heard from our users that accurately generating, delivering and filing tax forms for as many as hundreds of thousands of vendors, contractors and partners in multiple countries was a consistent difficulty and something they’d like to see fixed,” Stripe engineer Jorge Ortiz wrote in a blog post.
Stripe’s acquisition of Payable’s systems, which allow businesses to easily generate 1099 tax forms, comes after multiple years of partnering to make tax reporting easier for businesses with payouts to contract employees. Stripe and Payable began a working partnership in 2015 to provide 1099 forms to Stripe Connect users — including on-demand companies like Lyft and DoorDash — enabling them to simplify tax reporting.
The partnership expanded last year through the sharing of resources and communication via Slack, and the companies were able to process 10 times as many 1099 forms as the year before. By integrating with the Stripe API, Payable could easily generate tax forms for the hundreds of thousands of vendors and contractors to which Stripe Connect customers made payments over the prior year.
In a blog post, Payable co-founder Peter Terrill wrote that the company “brought on more users in January of 2016 as part of the partnership than we had in the previous two years combined.”
Going forward, existing Payable customers will continue to be hosted on payable.com through the next tax season.
Stripe will then integrate those tax reporting features — and make them available free of charge — for Stripe Connect users as part of the Stripe Dashboard.
North Korea’s For-Profit Hacking
Proving that sometimes trying new things is not always good, the North Korean army of cybercriminals is reported to have increasingly focused its skills on hacking for money — instead of data.
The search for lucre — as opposed to data, destabilization or intimidation — is a change of tactics for Pyongyang.
Some speculate that evolving a nuclear program is hard, especially when a nation is under extreme sanctions — and the money has to come from somewhere. Those ICBMs we’ve been seeing on the news for the last few days are not cheap to construct after all.
The Korea Financial Security Institute has reported that recent hacking efforts have included attempts to spike ATMS with malware to scrape card data. These types of tactics are generally more consistent with organized crime than state-sponsored hacking.
“North Korea now cares more about making money than causing disruptions or cyberterrorism,” said Joon Kim, owner of Naru Security Inc., who has advised South Korean law enforcement on cybersecurity issues.
Andariel — the hacking group — has been connected to eight similar cyberattacks in South Korea. Reports indicate the group has joined up with Bluenoroff to target a large South Korean financial institution.
“The problem is that it’s not just simple [cyber]attacks anymore with North Korea. It’s more orchestrated now, as if it were a military operation,” said Kim Seung-joo, a Korea University professor who sits on a South Korean government cybersecurity advisory team.
So what did we learn going into this week?
It’s important to learn new things. For Wells Fargo, that might mean learning to stop selling customers stuff they don’t need, don’t want and don’t ever remember buying. For Stripe, it means reducing friction at tax time. And cybercrime in North Korea means learning that money truly does make the world go round.
Have a good week.
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