Wells Fargo faces class-action over auto insurance
Wells Fargo is facing a class-action lawsuit related to last week’s disclosure that it charged customers for unnecessary auto insurance. The bank is still settling class-action suits relating to last year’s false accounts scandal, which resulted in a $185m fine. The lead plaintiff in the case, filed on Sunday in San Francisco, claims to have been charged $598 for insurance despite repeated requests to have the charges rescinded. Wells Fargo has pledged to pay $80m in compensation after disclosing that an internal investigation found 570,000 customers may have been forced to take unnecessary insurance between 2012 and 2017. 

Wells Fargo & Co., which is still settling class-action lawsuits over its fake-accounts scandal, has now been hit with yet another — related to the bank’s revelation last week that it charged auto loan customers for unnecessary insurance.

An Indiana man who says he was charged $598 for auto coverage despite repeatedly asking Wells Fargo to rescind the charges is the lead plaintiff in the case, which accuses the San Francisco bank of scheming with National General Insurance Co. to “bilk millions of dollars from unsuspecting customers.”

The lawsuit, filed Sunday in U.S. District Court in San Francisco, does not name the insurance carrier as a defendant. It is seeking class-action status.

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Last week, the bank acknowledged that an internal probe spurred by customer complaints found that, between 2012 and 2017, about 570,000 borrowers may have been wrongly pushed into auto-insurance policies despite having their own coverage.

The policies, so-called collateral-protection insurance, are typically issued by lenders after a customer takes out an auto loan on a vehicle and does not have coverage for it.

Wells Fargo said last week that it will pay $80 million in compensation to the customers, including some 20,000 who had their cars repossessed after the charges for the insurance caused them to default on their loans.

Catherine Pulley, a Wells Fargo spokeswoman, declined to comment on the specifics of the lawsuit but noted the bank’s offer of compensation.

“We announced a plan to remediate auto loan customers who may have been financially harmed due to issues related to auto CPI policies placed between 2012-2017,” the statement said. “We are very sorry for the inconvenience this caused impacted customers, and we are in the process of notifying them and making things right.”

The federal lawsuit accuses Wells Fargo of violating the Racketeer Influenced and Corrupt Organizations Act, as well as California’s Unfair Competition Law and Indiana’s Deceptive Consumer Sales Act. It also alleges fraud.

The lawsuit was filed by Baron & Budd, a law firm with offices in California, Louisiana and Texas. Other law firms also have announced they are investigating whether to file lawsuits over the matter, including Keller Rohrback, a leading class-action firm.

National General could not be reached for immediate comment.

laurence.darmiento@latimes.com

Follow me @ldarmiento on Twitter

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