Another Wells Fargo scandal erupted in recent days following a New York Times report that the San Francisco-based bank enrolled more than 800,000 of its auto loan customers in unneeded car insurance policies without their consent.
The dust barely began to settle on a series of previous Wells Fargo scandals – mortgage fraud that contributed to the 2009 financial crisis, sham credit card and deposit accounts, mortgage rate-lock fraud allegations, and whistleblower retaliation – when news broke July 27 that the bank defrauded its own auto loan customers.
Wells Fargo and National General Insurance Company allegedly stole millions of dollars from consumers through this scheme. Beasley Allen Law Firm is representing individuals who fell victim to the companies’ conduct in a class action lawsuit filed in the Federal District Court for the Southern District of New York on Monday.
An internal report obtained by The New York Times says the cost of the unneeded insurance policies, which covered collision damaged, caused many of its customers serious harm. According to the report, the unauthorized insurance policies pushed more than a quarter million Wells Fargo customers into delinquency and led to about 25,000 wrongful vehicle repossessions.
“The insurance, which the bank required, was more expensive than auto insurance that customers often already had obtained on their own,” The New York Times reported, citing the report prepared for Wells Fargo by consulting firm Oliver Wyman.
The report indicates that many of the delinquencies occurred because customers were not aware of the extra financial burden the bank placed upon them with the insurance. Many customers paying off auto loans by automatic draft had their accounts overdrawn, which typically results in extra fees, penalties, and other charges.
The audacity of Wells Fargo’s insurance scheme is further compounded by the bank’s admission that it attempted to keep the scandal under wraps until it could reimburse customers who were wrongfully charged for the insurance. Wells Fargo, however, was forced to face the music hours after The New York Times broke the story that the bank forced the unneeded insurance on its auto loan borrowers.
“Wells Fargo’s business practices have once again been exposed, revealing an unprecedented fraud on consumers,” said Dee Miles, one of the team of lawyers who filed the class action lawsuit. “Their partner in this alleged fraudulent scheme was another corporate giant, National General Insurance Company, who together with Wells Fargo threw thousands of hard-working consumers into a tailspin of confusion on their bank loans by falsely accusing consumers of not having insurance, forcing charges on the consumers accounts and then delaying any attempts to rectify the confusion resulting in serious damages to the consumers,” said Miles.
Lawyers at Beasley Allen Law Firm are continuing to investigate more potential cases involving individuals who have been affected by this bank / insurance scheme. For more information on this subject, contact Dee Miles, Lance Gould, or Leslie Pescia, lawyers in our firm’s Consumer Fraud Section, at 800-898-2034 or by email at Dee.Miles@BeasleyAllen.com; Lance.Gould@BeasleyAllen.com; or Leslie.Pescia@BeasleyAllen.com.
New York Times