Wells Fargo to Refund $80 Million of Unnecessary Car Insurance It Forced Onto Customers

Matt Posky
by Matt Posky
wells fargo to refund 80 million of unnecessary car insurance it forced onto

Wells Fargo says it will reimburse roughly $80 million to customers erroneously charged for auto collateral protection insurance policies. Customers will be remediated after roughly 800,000 customers were essentially forced to purchase unnecessary auto insurance, despite many of them already having active policies.

The banking and financial services firm reviewed policies started between 2012 and 2017 and identified approximately 570,000 customers who could have been negatively impacted. It plans to issue refunds and other payments as compensation, especially to those who defaulted on their auto loans as a result of being overcharged.

“In the fall of last year, our CEO and our entire leadership team committed to build a better bank and be transparent about those efforts,” said Franklin Codel, head of Wells Fargo’s consumer lending program, in a statement. “Our actions over the past year show we are acting on this commitment.”

The New York Times suggests the unnecessary insurance forced roughly 274,000 customers into delinquency and resulted in almost 25,000 wrongful vehicle repossessions, citing a 60-page report from consulting firm Oliver Wyman.

Wells Fargo has been under heavy pressure to put its best foot forward for about a year. In September, authorities announced branch staff may have opened 2.1 million unauthorized client accounts to meet the bank’s aggressive sales quotas. While over 5,300 employees were fired for improper sales tactics over five years, the company neglected to change the policies or management that created the problem until the matter became public knowledge in 2016.

The recent auto insurance scandal is a reminder that Wells Fargo still has a long way to go if it wants to improve its image — a common problem among banks. Other financial institutions have been caught tacking similar policies onto auto loans in recent years, including numerous British banks outed during the 2012 Libor scandal.

“We take full responsibility for our failure to appropriately manage the CPI program and are extremely sorry for any harm this caused our customers, who expect and deserve better from us,” Codel said. “Upon our discovery, we acted swiftly to discontinue the program and immediately develop a plan to make impacted customers whole.”

[Image: Mike Mozart/ Flickr ( CC BY 2.0)]

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  • Shaker Shaker on Jul 29, 2017

    Fargo go Too Far... again.

  • SaulTigh SaulTigh on Jul 31, 2017

    This is why I do all my financial business with two local credit unions. One for loans, the other for savings. Pretty soon, I won't even need the one for loans anymore. Everything is insured up to $250k, just like any "real bank," and they know me by name.

  • MrIcky Out of the possible Jeep recalls to bring up on this site, I'm surprised it's this one and not round 2 of the clutch recall.
  • Dukeisduke I saw a well-preserved Mark VII LSC on the road not too long ago, and I had to do a double-take. They still have a presence. Back when these were new, a cousin of mine owned an LSC with the BMW turbo diesel.
  • Dukeisduke I imagine that stud was added during the design process for something, and someone further along the process forgot to delete it after it became unnecessary.
  • Analoggrotto Knew about it all along but only now did the risk analysis tilt against leaving it there.
  • Mike Beranek Funny story about the '80 T-bird. My old man's Dart Sport had given up the ghost so he was car-shopping. He & I dropped my mom at a store and then went to the Ford dealer, where we test-drove the new T-Bird (with digital dash!)So we pull up to the store to pick mom up. She walks out and dad says "We just bought it.". Mom stares at the Mulroney- almost 13 grand- and just about fell over.Dad had not in fact bought the T-Bird, instead he got a Cordoba for only 9 grand.