By on June 10, 2019

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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9 Comments on “Wells Fargo Settles for $386 Million in Auto Insurance Suit...”

  • avatar
    SCE to AUX

    “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.”

    $394 million works out to an average of $1400 apiece. Seems like a pittance, and hardly makes these customers whole.

    “Wells Fargo has continued to deny any intentional wrongdoing”

    *That* set off the BS detector.

  • avatar

    My sister used to work for Wells Fargo, and she told us “Never, ever bank with Wells Fargo!”. Fortunately, I remembered that advice.
    There’s another big bank, formerly the Bank of Italy, which is best avoided.
    Credit unions take care of their customers instead of ripping them off at every opportunity.
    The latest is WF conveniently losing records of Certificates of Deposit, since they aren’t required to maintain records after seven years. Lots of people have lost significant amounts of money because they didn’t keep their paperwork, and thought that their bank was trustworthy.

  • avatar

    The claim that the wrongdoing wasn’t “intentional” ring hollow. Are their operations so vast that nobody genuinely noticed a pattern of complaints about unneeded force-placed insurance? I’d be willing to believe that the problem didn’t *start* maliciously, but after a point you have to regard the problem actively continuing as deliberate indifference.

    And I’d be willing to wager real money that for the people that had their car incorrectly repossessed aren’t going to be made whole for much beyond the direct financial impact, even if the consequences might have ranged from job loss, subsequent eviction, a trashed credit rating, etc. (The low amount of compensation of a few hundred $$$ per victim certainly points that direction.)

  • avatar

    Don’t get me wrong I know that they will never ever be things that are supposed to be equal however I do expect them to be fair. How is it that Volkswagen can be fine upwards of 25 to 26 billion dollars just to the United States and I don’t remember them defrauding over 800,000 people. They did this because they knew they could do it for an extended. Of time so they have to pay a price. and with that price being only a slap on the wrist. AT&t has done this before and got away with paying nothing. So have other large corporations.
    It’s just sickening to me that we continue to be ran into the ground. What’s sad is when these individuals get this money do I have to pay taxes on.

  • avatar

    Exactly how badly do corporate officers have to rob/screw people before they can be imprisoned? If any of us stole $400 million we would never see freedom again.

  • avatar

    Makes your local BHPH shark look like a solid citizen…..

  • avatar

    “Let the free market decide” says every Repub/Libertardian shill ever.

    The free market usually decides to F you in the A.

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