Wells Fargo Settles for $386 Million in Auto Insurance Suit

Matt Posky
by Matt Posky
wells fargo settles for 386 million in auto insurance suit

Wells Fargo will reportedly pay customers a minimum of $386 million to settle class-action claims that the bank covertly signed customers up for auto insurance they did not want or need.

Back in the summer of 2017, the bank found itself implicated in widespread auto insurance and mortgage lending abuses. Over a year later, Wells Fargo was slapped with a $1 billion fine from the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency to settle U.S. investigations into the company’s insurance and mortgage practices.

While the auto insurance plan ended in 2016, roughly 800,000 customers (or 600k by Wells Fargo’s estimates) were believed to be affected by the auto insurance issue over roughly a four-year period. For most, that meant being overcharged for insurance they didn’t need., but some customers ended up with their vehicles repossessed and their credit rating demolished, promoting the class-action suit.

The complaint claims the business’ suspect practices caused nearly 275,000 customers to become delinquent in their payments and caused the illegal repossession of nearly 25,000 vehicles. Wells Fargo has continued to deny any intentional wrongdoing, claiming it settled to avoid the cost and risks stemming from litigation. Reuters reports that court documents stipulate the firm is also required to pay $36.5 million for the plaintiffs’ legal costs. The bank called the settlement “an important step in making things right for customers.”

“We will continue sending individualized letters to customers that clearly set out the remediation amount due to them, as well as a check for that amount,” the bank said in a statement.

Financial underwriter National General Insurance Co. is expected to pay an additional $7.5 million, making the total customer payout over $393.5 million. The details of the settlement were disclosed last week via filings in U.S. District Court in Santa Ana, CA, and are still dependent upon a judge’s approval.

[Image: Kristi Blokhin/Shutterstock]

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