According to Reuters, a newly filed lawsuit alleges that four years before the bank ended its scamming auto insurance program, Wells Fargo executives were specifically warned that the bank’s fraudulent car insurance program could be overcharging customers. According to the report, a complaint released from seal this week said that executives were briefed in 2012 about the auto insurance program which was ended in 2016, which resulted in 800,000 people being forced to buy insurance they didn’t need. The bank called it “collateral protection insurance.” Reuters reports that company execs were warned that the plan could be overcharging customers four years before the bank ended the program in September 2016.
The class action lawsuit was filed in August of this year in the Central District of California but was kept under seal at the request of Wells Fargo until some details were released this week. It is unusual for such a case to be sealed by the court and unclear as to why this was kept from the public The plaintiffs in the suit are seeking reimbursement for wrongful charges and say that Wells Fargo pressured drivers with poor credit into insurance policies more often than well-off customers.
In television commercials, Wells Fargo says that “we’re sorry we screwed up.”
Wells Fargo has committed a long list of consumer abuse scandals. For example, it has admitted improperly foreclosing on homes, in fact, more homes than it previously reported due to a “calculation error.” After an internal review, the bank found that 870 customers were erroneously denied mortgage changes, with 545 of them losing their homes as a result of the error. The bank first reported the mistake in August but said only 645 eligible borrowers were denied and of those, 400 lost their homes. The bank added that it had fixed the glitch and put $8 million aside to compensate borrowers this summer, but it hasn’t updated that number since admitting more customers have been impacted.
Reuters, which first reported the news, cited an underwriting error that internally prompted the bank to reject home loan modifications instead of helping them. Also, in 2016 scandal it was revealed that millions of fake accounts were created by its bankers over the years to meet sales targets. Employees were encouraged to order credit cards for pre-approved customers without their consent. Employees also created fraudulent checking and savings accounts, sometimes moving money out of legitimate accounts. Estimates, released in May 2017, placed the number of fraudulent accounts at closer to a total of 3,500,000
No executives have been criminally prosecuted and it is likely that no one will go to jail. There have been some fines paid but the bank has not had to endure a public trial and its earnings are strong.
