Wells Fargo says it will reimburse roughly $80 million to customers erroneously charged for auto collateral protection insurance policies. Customers will be remediated after roughly 800,000 customers were essentially forced to purchase unnecessary auto insurance, despite many of them already having active policies.
The banking and financial services firm reviewed policies started between 2012 and 2017 and identified approximately 570,000 customers who could have been negatively impacted. It plans to issue refunds and other payments as compensation, especially to those who defaulted on their auto loans as a result of being overcharged.
“In the fall of last year, our CEO and our entire leadership team committed to build a better bank and be transparent about those efforts,” said Franklin Codel, head of Wells Fargo’s consumer lending program, in a statement. “Our actions over the past year show we are acting on this commitment.”
The New York Times suggests the unnecessary insurance forced roughly 274,000 customers into delinquency and resulted in almost 25,000 wrongful vehicle repossessions, citing a 60-page report from consulting firm Oliver Wyman.
Wells Fargo has been under heavy pressure to put its best foot forward for about a year. In September, authorities announced branch staff may have opened 2.1 million unauthorized client accounts to meet the bank’s aggressive sales quotas. While over 5,300 employees were fired for improper sales tactics over five years, the company neglected to change the policies or management that created the problem until the matter became public knowledge in 2016.
The recent auto insurance scandal is a reminder that Wells Fargo still has a long way to go if it wants to improve its image — a common problem among banks. Other financial institutions have been caught tacking similar policies onto auto loans in recent years, including numerous British banks outed during the 2012 Libor scandal.
“We take full responsibility for our failure to appropriately manage the CPI program and are extremely sorry for any harm this caused our customers, who expect and deserve better from us,” Codel said. “Upon our discovery, we acted swiftly to discontinue the program and immediately develop a plan to make impacted customers whole.”
[Image: Mike Mozart/Flickr (CC BY 2.0)]
“Too big to fail.”
Too big to act ethically
Banks used to follow the 3-6-3 rule – which meant paying 3% interest on deposits, charging 6% on loans, and being on the golf course by 3 PM. If Wells Fargo went back to following the modern version of that simple rule (1-3-3) they wouldn’t be getting into so much trouble.
“Banks used to follow the 3-6-3 rule ”
Sounds pretty comfortable, and it was a workable arrangement. Yet, it wasn’t enough.
Also, you have to know to whom you loan the money to, and have an actual interest in them paying back, not just selling the debt to a third party.
Thieves.
Wish I could tell you how much they messed me up. They’ve recovered. My finances are forever scr3w3d. F0ck3rs!
Bring back Wachovia on the east coast. No problems until WF took over.
I purchase unnecessary insurance every year.
If there was a comment of the day here b534202 would have my vote.
We are screwed up don’t you agree? We need to change the world, we need a revolution, socialism is the only solution.
Yeah dude Venezuela is awesome. Let’s do it!
Denmark seems pretty good. Let’s shoot for that instead.
Lichtenstein baby, all the way. Viva Barnie!
Ugh. There are SO MANY good credit unions out there.
Wells Fargo customer from 2002 to 2009, Credit Union since. Now I wonder what the heck I was thinking back in the Wells Fargo days.
Fargo go Too Far… again.
And the bank keeps hoping All’s Wells that ends Wells.
This is why I do all my financial business with two local credit unions. One for loans, the other for savings. Pretty soon, I won’t even need the one for loans anymore.
Everything is insured up to $250k, just like any “real bank,” and they know me by name.