Other features of this story were addressed in an article published on Monday of this week on Insurance Claims and Issues Blog.
Wells Fargo admittedly placed "collateral protection insurance" on its auto-loan borrowers and forced the premiums onto the borrowers' auto loans. Wells only disputes how many of its customers it did this to.
Wells Fargo also admits that it sometimes force-placed the insurance even when the borrowers already had auto insurance.
Wells Fargo further admits that the force-placed insurance premiums sometimes forced the borrowers into having their cars repossessed because they could not make the payments Wells added to their auto loans.
These admissions come to us courtesy of a report commissioned by Wells Fargo. See Alexa D'Angelo and James Rufus Koren, "Wells Fargo Charged Customers for Unneeded Auto Insurance -- Then Repossessed Their Cars" (Los Angeles Times Online, posted on Friday, July 28, 2017), also accessible at http://www.latimes.com/business/technology/la-fi-wells-fargo-insurance-20170728-story.html.
The consequences of Wells's admitted conduct even go beyond its customers. The pending Consumer Financial Protection Bureau (CFPB) rule prohibiting mandatory arbitration provisions and class-action waivers in consumer contracts is reportedly being held up by the news from Wells. "Some of Wells' auto loan contracts contain arbitration clauses, a spokesman said, which could become a further lightening rod in the dispute over whether customers should be allowed to band together in class-action lawsuits." Kate Berry, "New Wells Scandal Harms Effort to Nix CFPB Arbitration Rule" (American Banker Online, posted on Friday, July 28, 2017), also available by pasting this website into your browser, but be forewarned that American Banker articles all seem to be protected by a paywall requiring a subscription, and this article is certainly one of those: https://www.americanbanker.com/news/new-wells-scandal-harms-effort-to-nix-cfpb-arbitration-rule?brief=00000158-07c7-d3f4-a9f9-37df9bc10000.
Dennis Wall is the author of "Lender Force-Placed Insurance Practices" published by the American Bar Association.
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