The bank charged customers for unnecessary coverage, leading to 25,000 wrongful vehicle repossessions.
A new report determined Wells Fargo auto insurance was forcibly sold to customers who did not require this coverage. As a result of the bank’s activity, there were approximately 25,000 wrongful vehicle repossessions.
Over 800,000 people who took out Wells Fargo car loans were charged for unnecessary insurance.
The added expense of the unnecessary Wells Fargo auto insurance was too much for some borrowers, whose vehicles were wrongfully repossessed. The report showed that among 800,000 of the bank’s customers, auto loans lead to the sale of car insurance the drivers did not need. In fact, many of those customers continue to be charged premiums for that coverage and are still required to pay for it, said an internal report prepared by the bank’s own execs.
Approximately 274,000 Wells Fargo customers were forced into delinquency as a result of the added collision coverage expense. Among them, nearly 25,000 people faced wrongful vehicle repossession. This, according to an article in the New York Times which gained access to the 60 page report.
Some of the people harmed by the unnecessary Wells Fargo auto insurance expense were active military service members.
Wells Fargo is already scrambling to try to overcome the harm caused to its reputation following its last scandal. Last year, it was discovered that employees had been creating millions of bank and credit card accounts in the names of customers who had never requested those accounts. This practice had become commonplace with the bank. The bank, one of the largest in the U.S., was forced to pay millions of dollars in fines and took down its chief executive officer.
Recently, the Wells Fargo has also been the target of accusations of improper adjustments to home loan terms for bankrupt customers. Wells Fargo denies that its practices were improper in this circumstance.
That said, it certainly didn’t help things when the Wells Fargo auto insurance scandal added itself to the pile of reputation harm the bank is already facing. In this most recent case, the bank has acknowledged the problem and said that it was determined to repair the damage and the practice.
“We have a huge responsibility and fell short of our ideals for managing and providing oversight of the third-party vendor and our own operations,” said Wells Fargo head of consumer lending, Franklin R. Codel. “We self-identified this issue, and we made the right business decisions to end the placement of the product.”