Wells Fargo Saddles 800,000 Customers With Unnecessary Car Insurance

By on August 7, 2017

 

Wells Fargo automatically signed up car loan borrowers with car insurance, even if the customers were already covered by car insurance, demanded payment of car premiums and put hundreds of thousands of people into default.

Many people did not notice the charges, or not right away, because they were deducted automatically from their Wells Fargo bank accounts. Consumers that did not or could not pay were deemed in default, resulting in repossessions of cars for thousands, which resulted in a slew of repossession fees. Fees were also collected when the automatic withdrawals resulted in overdrafts of customer accounts.

The insurance was underwritten by National General Insurance which had a revenue-sharing arrangement with Wells Fargo until 2013.

This story was first reported by the New York Times on July 27, 2017, which quoted a Wells Fargo spokesperson as stating that “We take full responsibility for these errors and are deeply sorry for any harm we caused customers”.

Home and auto lenders require borrowers to insure collateral for the loans and can force insurance on borrowers under certain circumstances. Such force-placed insurance can sometimes lead to abuses that benefit the lender or insurance company at the expense of the borrowers, and have resulted in regulatory actions and class actions that were settled and returned money to wronged borrowers.