Bowing to pressure from customers, Wells Fargo & Co. has reversed a decision to slap fees on certain checking accounts.
In a letter to be mailed next week, the San Francisco banking company plans to tell roughly 164,000 customers that their fee waivers have been reinstated and will continue for the lives of their accounts.
Bank officials acknowledged that they got many complaints from customers who had been promised free checking for life by institutions that were subsequently acquired by Wells Fargo.
"We heard from a lot of disappointed customers," executive vice president James K. Ketcham said in a statement. "Many had strongly held beliefs that these accounts would remain free for life."
The controversy was sparked by a May 28 letter in which Wells told such customers they would have to maintain a $1,000 minimum balance or start paying a monthly fee of up to $9. Wells had done its annual pricing review and decided to start charging fees for the free accounts, some of which had balances of as little as $50.
Some of the targeted customers, who make up about 3% of Wells' 5.2 million checking account holders, sued the $93.2 billion-asset banking company.
In a lawsuit last month, Fred M. Stiesberg, 85, accused Wells of breaking a promise to honor free-checking terms that customers had with institutions bought by the bank.
Mr. Stiesberg had had an account at Great American Bank of San Diego, which Wells bought in 1991. The account charged no fee, regardless of balance, and Great American had promised it would remain free for as long as Mr. Stiesberg held it, he said. He sought class-action status and up to $18 million in damages.
While Mr. Stiesberg's lawyer, James V. Parziale, said he was "gratified" by Wells Fargo's decision, the lawsuit will not be dropped.
"We are going to continue with the litigation and ask the court to issue an order preventing the bank from changing course once again," Mr. Parziale said.
One observer said Wells may have been nudged into reversing its decision by its pending merger with Norwest Corp., Minneapolis.
"When you consider that Wells is going to be part of Norwest, which is well known to be much more of a customer relationship player, it makes a good deal of sense for Wells to reverse itself in this situation," said Charles B. Wendel, president of Financial Institutions Consulting in New York. "If a bank offends customers with the way it offers its core products, the bank hurts itself."
Customers who closed or switched accounts because of the May 28 announcement are to be allowed to reopen or transfer funds back to their original free accounts, Wells said.
They will be invited to call an 800 number to make the switch.