Wells Fargo & Co. is in hot water again. While still settling class-action lawsuits involving fake accounts, the company is now facing another scandal. This one is related to unnecessary auto insurance being added to customer’s car loan accounts.
The lead plaintiff in the case is an Indiana man who claims that he was charged $598 for auto coverage that he did not need, though he repeatedly asked Wells Fargo to remove the charges from his account.
The lawsuit, filed this past July in U.S. District Court in San Francisco, also involves National General Insurance, the underwriter of the policies. Allegedly, Wells Fargo shared borrowers’ information with National General, who automatically placed the insurance on the unsuspecting customers. It was then the consumer’s responsibility to notify Wells Fargo that they were being charged for insurance they never requested. The problem arose due to the fact that some customers were not aware that they were being double charged for insurance they didn’t need or want.
An internal probe instigated by customer complaints found that between 2012 and 2017, approximately 570,000 borrowers may have been forced into auto-insurance policies they never requested despite having their own coverage with another company.
The federal lawsuit accuses Wells Fargo of violating the Racketeer Influenced and Corrupt Organizations Act, as well as California’s Unfair Competition Law and Indiana’s Deceptive Consumer Sales Act. It also alleges fraud.
The original lawsuit was filed by Baron & Budd, a law firm with offices in California, Louisiana and Texas. Other law firms also have announced they are investigating whether to file lawsuits over the matter.
The company has started issuing refunds to some customers and will send letters and refund checks to additional customers in August. The bank said it expected to complete the refunding process by the end of the year.
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