Borrowers forcibly made to purchase auto coverage they didn’t need are suing the bank for scamming them.
Wells Fargo & Co has been accused of running an insurance scheme, as was reported yesterday by Live Insurance News, and now affected customers are filing a lawsuit against the bank.
Customers allege the bank forced them to pay for auto insurance they didn’t need and that caused financial hardship.
In yesterday’s article, it was pointed out that the insurance scheme caused many customers to face expenses they couldn’t afford. This led several to fail to be able to make their payments and thousands had their vehicles repossessed.
The affected customers filed the lawsuit during several consecutive months of problems being unearthed at Wells Fargo. The bank has been struggling with a number of problems and scandals. These began when it turned out that the bank’s employees had opened millions of bank accounts and credit card accounts in the names of customers who hadn’t asked for or wanted those products. That had been occurring for around five years. The bank just finished paying out $185 million in settlement funds to a regulator.
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This latest insurance scheme was hardly the type of headline the bank needed at this time.
The forced auto insurance coverage was discovered internally. Moreover after it was identified, executives published a report detailing the problem. The class-action lawsuit about the matter was filed in a San Francisco court. It accused the bank of scamming millions of dollars out of “unsuspecting customers who were forced to pay for auto insurance they did not need or want.”
The issue isn’t a small matter, nor were the unnecessary costs low. The additional expenses drive almost 250,000 borrowers into delinquency. Nearly 25,000 of them had their vehicles repossessed, said the lawsuit filing. In fact, there are several customers that are still being required to pay the additional premiums that were unnecessarily added to their auto loan bills, often without having been notified of the addition, said the filing.
The scandal from this insurance scheme is taking more whacks at Wells Fargo’s reputation, which is already bruised from a difficult year. The bank has said that it has already been preparing to compensate the affected drivers. The problem was found internally and actions were already being taken to pay as much as $80 million to affected borrowers, with additional funds set aside for those whose vehicles were repossessed, “as an expression of our regret.”