Wells Fargo To Pay $8M To Settle West Virginia Lawsuit Against Company It Acquired in 2001

Image courtesy of Mike Mozart

Eleven years ago, West Virginia accused an insurance broker called Acordia of improperly pocketing millions of dollars in commissions. Acordia is now doing business under the Wells Fargo banner, and the big bank has agreed to pay $8 million to settle this decade-old lawsuit.

West Virginia Attorney General Darrell McGraw announced Tuesday that Wells Fargo has agreed [PDF] to pay $8 million to resolve decades-old allegations that Acordia’s marketing practices limited competition for insurance and violated state antitrust and consumer credit protection laws.

Specifically, the lawsuit claimed that Chicago-based Acordia’s marketing practices artificially increased profits of various insurance companies to the detriment of consumers by favoring certain insurance carriers over others.

The original complaint, filed in 2005, came after the AG’s office initiated an investigation in 2004.

Prior to that probe, the Charleston Gazette-Mail reports, investigators in New York found secret deals between brokers and insurance companies, in which the brokers agreed to steer clients toward companies that paid them “contingent commissions” in addition to normal fees.

According to the West Virginia lawsuit, Acordia’s insurance placements were made “regardless of whether the insurers provided the best cost, coverage and financial security for the client,” Business Insurance reported in 2005.

Instead, the AG’s office alleged that the placements decisions were made according to which insurance company paid “the most money in contingent commissions, profit sharing and kickbacks.”

Wells Fargo, which denies any wrongdoing in the settlement, acquired Acordia in 2001, but didn’t change the company’s name until 2007.

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