SAN FRANCISCO (dpa-AFX) - Wells Fargo & Co. (WFC) customers have filed a class action lawsuit against the bank, alleging that Wells Fargo victimized its auto loan customers by charging them millions of dollars for auto insurance they did not need.
According to the lawsuit filed in San Francisco federal court, Wells Fargo is accused of forcing unsuspecting customers for auto insurance they did not need, pushing almost 250,000 of them into delinquency and resulting in almost 25,000 vehicle repossessions.
According to the complaint, neither Wells Fargo nor the insurance company, National General Insurance, checked whether the clients who took out Wells Fargo loans to buy vehicles already had insurance coverage, or they just ignored the information. National General Insurance underwrote the policies for Wells Fargo.
'Wells Fargo, while vowing to 'make things right' in the wake of its recent scandal over unauthorized bank accounts, was apparently hoping this unlawful practice could slip by unnoticed,' the complaint says.
According to an internal report obtained by the New York Times, Wells Fargo required its customers to whom it issued auto loans to buy National General Insurance policies. However, that insurance was often more expensive than the insurance those customers already had. The practice may have extended as far back as 2006.
Indianapolis consumer Paul Hancock has claimed in the lawsuit that Wells Fargo received kickbacks from National General Insurance.
Last Sunday, Wells Fargo announced a plan to remediate auto loan customers of Wells Fargo Dealers Services who may have been financially harmed due to issues related to auto Collateral Protection Insurance or CPI policies.
Wells Fargo said it reviewed policies placed between 2012 and 2017, and has identified about 570,000 customers who may have been impacted. These customers will receive refunds and other payments as compensation.
In total, Wells Fargo will send about $64 million of cash remediation to customers in the coming months, along with $16 million of account adjustments, for a total of approximately $80 million in remediation.
Wells Fargo added that starting in August 2017, it will proactively reach out to impacted customers with letters and refund checks.
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