Report: 25,000 Wells Fargo Customers Lost Vehicles After Bank Charged For Unwanted Insurance

Image courtesy of Mike Mozart

Nearly 25,000 Wells Fargo customers, including many servicemembers, lost their vehicles after failing to pay for unneeded, unwanted insurance the bank charged them for, according to a new report suggests. 

The New York Times reports that a 60-page internal report prepared for Wells Fargo executives details the bank’s latest customer service fiasco involving hundreds of thousands of people who were charged for unneeded insurance.

According to the report, more than 800,000 people who received car loans from Wells Fargo from Jan. 2012 through July 2016 were charged for unneeded insurance policies underwritten by National General Insurance.

Expensive Insurance

The insurance, which the bank required on auto loans beginning in 2006, was automatically added to customers’ tabs through Wells Fargo’s Dealer services unit.

When a customer came to Wells Fargo for an auto loan their information was sent to National General Insurance. While the company was supposed to check to see if the customer already had insurance, that didn’t always happen.

Instead, a new insurance policy — often more expensive than the auto insurance customers had already acquired — would be added to the borrower’s account.

The Times reports that several states’ insurance regulations require Wells Fargo to notify customers that the insurance was added. However, the report suggests that nearly 100,000 people did not receive proper disclosure.

Defaults and Repossessions

Of those pushed into the coverage, the report notes that 274,000 Wells Fargo customers were unable to pay for the insurance, eventually entering delinquency.

This, the Times reports, occurred because of the way Wells Fargo charged customers for the insurance.

In some cases, the report found that customers who agreed to have their monthly loan payments deducted from their bank account automatically weren’t notified that the insurance payment would be added to that amount. As a result, some accounts could become overdrawn.

In complaints filed with the Consumer Financial Protection Bureau some customers reported that despite proving to Wells Fargo that they already had insurance, they continued to receive calls seeking payment on the bank-provided insurance policies.

This, despite the fact that Wells Fargo was supposed to cancel the policies and refund borrowers for the unneeded insurance.

In all, the report estimates that the bank owed customers $73 million, a figure that includes late fees, repossession costs, and insufficient fund fees charged when an account is overdrawn.

Difference In Figures

For its part, Wells Fargo tells the Times that the bank’s own determination found that just 570,000 customers were affected by the issues, and only 20,000 repossessions occurred.

“We take full responsibility for these errors and are deeply sorry for any harm we caused customers,” a rep for the bank said.

National General Insurance, which split commission on the policies with Wells Fargo until 2013, declined to provide comment to the Times.

A rep for the Office of the Comptroller of the Currency, the regulator in charge of overseeing Wells Fargo, tell the Times that he could not comment on any action pending from the issues.