The hits keep on coming insofar as accusations of unethical and, likely, illegal behavior that went on at Wells Fargo. A class action lawsuit has been filed that potentially may involve hundreds of thousands of customers who were given auto insurance policies by the giant financial institution that they did not want or need, often without their knowledge, along with auto loans, according to Bloomberg.
Apparently, Wells Fargo either did not check or ignored the fact that customers who took out auto loans already had car insurance. The company tacked on collateral protection insurance policies to the auto loan bills. As many as 500,000 customers were forced to pay the premiums for these insurance policies even though they already carried their own policies. Moreover, 250,000 customers were driven into default for failure to pay premiums on policies they were not aware they had. Almost 25,000 people had their cars repossessed for failure to pay for the bogus policies.
The lawsuit claims that Wells Fargo received kickbacks from the insurance carrier, National General Holdings Corp. The insurance carrier is not named in the lawsuit.
Wells Fargo is scrambling to make things right, pledging to pay as much as $80 million to affected customers as well as extra money to those who lost their vehicles as “an expression of regret.” However, aside from monetary losses, the affected customers have likely taken a hit on their credit ratings that will be difficult to recover from and will have long-lasting deleterious effects on their finances. Wells Fargo may be paying out a lot more than $80 million.
The car insurance scandal comes on top of a separate class action brought by outraged customers who had checking and credit card accounts opened in their name without their knowledge or permission.
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