Wells Fargo Hit With Car Loan Customer Lawsuit While Backlash Grows
Less than a month after Wells Fargo & Co. (WFC) CEO Timothy Sloan lodged one class-action lawsuit accusing the bank of exploiting its customers, the company is grappling with another.
This time, however, it’s over unnecessary insurance policies tacked on to auto loans rather than bogus credit card and savings accounts.
A borrower who financed a February two thousand sixteen automobile purchase through the lender filed a lawsuit in U.S. District Court in San Francisco on Sunday, July 30, claiming he was charged for insurance he didn’t need and seeking class-action status to represent all U.S. borrowers in the same situation, as well as those in the states of California and Indiana, specifically.
The suit, involving a vehicle purchased at a Ford dealership in Indiana, was initiated less than three days after Wells Fargo said it would comeback $80 million to about half a million vehicle-loan customers enrolled in so-called collateral protection policies even however the borrowers already met the lender’s insurance requirements. Collateral policies protect lenders from harm to cars used to secure loans if the driver lacks sufficient coverage.
The discovery compounds the harm to Wells Fargo’s picture from an earlier scandal involving the creation of as many as two million unauthorized accounts over five years by employees fighting to meet aggressive sales quotas. The accounts, made public in a $185 million settlement with regulators, spurred criminal investigations, flamy Congressional hearings and the abrupt retirement of then-Chairman and CEO John Stumpf.
Sloan, his successor, had just lodged a customer suit over that matter for $142 million and was making progress in rehabilitating the Wells brand when the auto-loan issues were disclosed.
“We are very sorry for the inconvenience this caused impacted customers, and we are in the process of notifying them and making things right,” bank spokeswoman Catherine Pulley said on Monday. She declined to comment on the specifics of the suit, but noted that the bank had halted the collateral protection program in September after discovering flaws in “vendor processes and our internal controls.”
Wells Fargo is a holding in Jim Cramer’s Activity Alerts PLUS charitable trust portfolio. Want to be alerted before Cramer and the AAP team buy or sell the stock? Learn more now.