Wells Fargo forced loan recipients to take out auto insurance

An internal report conducted in order to present to executives at Wells Fargo found that over 800,000 people were charged with unnecessary car insurance. This in turn reportedly led to around 25,000 wrongful repossessions of vehicles.

The report found that Wells Fargo customers were unnecessarily sold auto insurance that many could not afford. Almost 10 percent of those sold the unnecessary insurance eventually had their vehicle wrongly repossessed. The 60-page report also revealed that many of the customers that were negatively affected by this practice were members of the military service who were on active duty when the wrongful repossession occurred.

The company began to require that customers take out auto insurance alongside their auto loans in 2006, and this practice continued until September 2016. This insurance was forced on customers that had often acquired insurance independently, and was also more expensive than their original insurance.

Borrowers became quickly behind in their repayments because they had set up direct debits only for the cost of the auto loan itself. They were not advised that their loan account would quickly become overdrawn due to the auto insurance in addition.

Consulting firm Oliver Wyman produced the report, and conducted research to establish how many customers experienced wrongful repossession. They estimated that around $73 million was owed back to customers, with 570,000 customers potentially qualifying for a refund.

The practice broke the disclosure requirements of several states, and led to customers suffering financially from late fees, credit report damages, insufficient fund charges and repossession costs.

If you feel that your auto was repossessed without proper cause, an attorney may be able to help you find relief.

Source: New york times, “Wells farsi forced unwanted auto insurance on borrowers,” Gretchen Morgenson, July 27, 2017