Shortly after having paid a total of more than $300 million in fines and settlement payments for allegedly opening fake accounts for its customers without their knowledge or consent, Wells Fargo is once again back in the spotlight for allegations of fraud.
This time the allegations are in regards to the bank’s auto lending business, which allegedly signed up and charged customers for car insurance they may or may not have needed or been made aware of. According to the class action lawsuit, most of the approximately 570,000 customers involved were not looking for a car loan from Wells Fargo, but got one anyway after they had chosen an automobile.
Wells Fargo required borrowers to maintain comprehensive car insurance, like almost any other auto loan company. Unlike other auto loan companies, Wells Fargo allegedly bought insurance for its customers who did not have comprehensive insurance, then charged them for it. Wells Fargo even admitted to buying insurance for customers who already had coverage.
National General has also been named as a defendant in the lawsuit, as it is the company from which Wells Fargo purchased insurance on behalf of the customers it deemed were underinsured (whether they were or not). The bank then charged their customers for that insurance, regardless of whether those customers could afford the insurance Wells Fargo had bought for them.
Many of the customers who were forced to pay for auto insurance they could not afford fell behind on their payments, to the point where some were forced to default on their loans, resulting in the repossession of their vehicles. Continue reading