On July 30, 2017, Wells Fargo & Co. customers filed a putative class action lawsuit alleging the bank forced them to pay for unnecessary auto insurance, which resulted in some members of the purported class having their vehicles repossessed. The lawsuit, Hancock v. Wells Fargo & Co., et al., 17-cv-04324, U.S. District Court, Northern District of California (San Francisco), alleges that Wells Fargo partnered with an insurance company in a scheme that caused over 800,000 auto loan customers to pay for unnecessary insurance policies. The complaint further alleges that the scheme forced 250,000 customers into delinquency and led to nearly 25,000 unlawful vehicle repossessions. Under the alleged scheme, Wells Fargo and the insurer either failed to check whether the customers already had insurance, or chose to ignore the information, and automatically imposed auto policies on them. Wells Fargo then automatically deducted the policies’ premium costs from their customers’ bank accounts. Even when customers protested and alerted Wells Fargo of the unnecessary coverage, the bank allegedly refused to take any corrective actions. As a result of the foregoing, the suit seeks compensatory damages, restitution, disgorgement, and treble damages, among other forms of relief.
According to Bloomberg, Wells Fargo admits that it may have pushed car buyers into unwanted insurance, and that its own internal review found that over 500,000 customers may have been paying for such coverage, even though they already had their own policies in place. Bloomberg also reports that Wells Fargo said it may pay as much as $80 million to affected customers, with extra money being paid to the 20,000 individuals who lost their cars to repossessions “as an expression of our regret”. According to the Hancock complaint, the lawsuit is aimed at testing the truth of Wells Fargo’s statements about being sorry for the harm it caused and the depth of its commitment to its customers.
Recently, Wells Fargo has been no stranger to scandals. Hancock contends that the bank’s customers are still reeling from its earlier scandal, in which it was uncovered that the bank opened millions of credit card and bank accounts that customers never requested and resulted in a $185 million settlement last year with regulators.