This Bank Is Paying $130 Million to Its Customers for a Major Insurance Scandal
That could pay for at least 10 new cars!
Pakhnyushchy/ShutterstockCar insurance is a good and correct thing to have. (Here are 15 of the most bizarre car insurance claims of all time.) Even the most diligent driver is prone to a slip up every now and then and thanks to insurance, there’s a safety net preventing everybody from ending up knee deep in a financial quagmire. But Wells Fargo has landed in a bit of trouble because, to continue the safety net analogy, it sold a bunch of its customers an inordinate number of safety nets.
As reported by Jalopnik, the banking titan will have to pay out $130 million in damages thanks to a bit of nefarious insurance salesmanship. Wells Fargo admitted in July that an internal control error led to the selling of car insurance to up to 800,000 customers that didn’t need it. As a result of the gaffe, as many as 25,000 customers had their cars wrongfully repossessed.
The issue all started when customers would take out a car loan from Wells Fargo. Wells Fargo would send along the customer’s information to National General, who in turn would provide collateral insurance for people that didn’t have proof of insurance. Wells Fargo was responsible for informing National General if a customer had insurance, and in hundreds of thousands of cases, it failed to do just that. The collateral insurance was indiscriminately added automatically to customers without proof of insurance (a good thing) and with proof of insurance (a bad, expensive, wasteful thing).
When the scandal was first discovered, Wells Fargo claimed that the program had been in effect since June of 2016 and that it terminated several months later. However, in the cases’ filing, Wells Fargo stated that customers dating as far back as October 2005 may be eligible for a refund. On November 3rd, it was announced that company had begun sending out refund checks to affected customers who received signed up for policies between January 1, 2012, and September 30, 2016.
One hundred million dollars of the payments will come in the form of cash remediation, while $30 million will come in the form of account adjustments. Also mentioned in the claim was an instance of retaliation claimed by a former employee, who alleges they were punished by the company after speaking up about the sketchy practices mentioned above. (This insurance scandal might be hard to beat, but here are 6 other insurance policies it’s best to steer clear of.)