Dallas Fort Worth Insurance Lawyer Blog
This time, one of the insurance company games does not involve cheating on a claim, rather it involves they overcharging for auto insurance.
The information comes from an Insurance Journal story titled, Lawsuit Says Fargo Executives Knew About Insurance Overcharges.
The article tells us that Wells Fargo & Co. executives were warned that an auto insurance plan could be overcharging customers four years before the bank scrapped the program, according to a complaint released by a Judge.
Several Wells Fargo executives, including their then, General Counsel and their chief auditor, were among the bank officials briefed in 2012 about possible flaws in the auto insurance program that was ended in 2016. This was learned in parts of a class action lawsuit that was released by the Judge.
Wells Fargo as stated that they intend to repay all customers who were hurt by insurer.
Wells Fargo officials and executives named in the lawsuit could not be reached or did not comment about the papers that were released by the Judge. They have been warned that they may be facing possible court sanctions for their past work with Wells Fargo.
Wells Fargo ended its auto insurance program in September 2016, after an internal review found many customers were being wrongfully placed in a costly product they did not need.
Wells Fargo had a right to force auto borrowers into the auto insurance product called “collateral protection insurance” (CPI) if they let their own policies lapse. Ultimately, the bank said some 600,000 customers were forced into CPI unnecessarily when it reached a $1 billion regulatory settlement.
Wells Fargo initially estimated it would cost $64 million, but that number has grown to $241 million.
These auto insurance abuses are part of a broader scandal over Wells Fargo’s treatment of customers. The bank revealed over two years ago that it opened millions of phony accounts in customers’ names without their permission to hit sales targets.
Wells Fargo has since found sales abuses in businesses ranging from mortgage loans to wealth management.
This lawsuit was originally filed in U.S. District Court, Central District of California. Wells Fargo has fought to keep details of the case from the public.
In the lawsuit, customers are seeking reimbursement for wrongful charges and allege Wells Fargo pushed drivers with poor credit into policies more often than well-off customers.
Wells Fargo was 10 times more likely to force borrowers with damaged credit into CPI insurance than those with high credit scores, according to the lawsuit. This allegation cites an internal bank presentation.
Drivers of Tesla vehicles and others who carried high loan balances were exempted from CPI.