What is happening to Wells Fargo? First it was the deposit and credit card accounts opened without customers’ permission. Now it’s unwanted auto insurance.
In a statement Thursday, the bank said it will be contacting customers “who may have been financially harmed due to issues related to auto Collateral Protection Insurance (CPI) policies.”
Thousands of those customers likely were in Washington.
At issue are about 570,000 customers nationally with auto loan contracts where policies were bought from a third-party vendor (National General).
The were bought, according to the bank, “on the customer’s behalf if there was no evidence — either from the customer or the insurance company — that the customer already had the required insurance.”
Wells Fargo explained: “CPI protects against loss or damage to a vehicle serving as collateral to secure a loan and helps ensure that borrowers can pay for damages to a vehicle.”
But then the unsought “help” took another turn.
“As a result, customers may have been charged premiums for CPI even if they were paying for their own vehicle insurance, as required, and in some cases the CPI premiums may have contributed to a default that led to their vehicle’s repossession,” according to Wells Fargo’s statement.
The CPI program was discontinued in September 2016, the bank said.
In a report Thursday, The New York Times reported that Washington was one of five states where the program violated state disclosure requirements.
Arkansas, Michigan, Mississippi and Tennessee were the other states listed in The Times’ report.
Wells Fargo’s own statement did not specify which five states, but did note: “In five states that have specific notification and disclosure requirements, approximately 60,000 customers did not receive complete disclosures from our vendor as required prior to CPI placement.
“In these cases, even if CPI was required, customers will receive a refund including premiums, fees and interest. Refunds for this group total approximately $39 million.”
Additional payments will be made to those who may have lost their vehicles to repossession after defaulting.
Wells Fargo said it has started issuing CPI-related refunds and in August will send letters and refund checks to customers due additional payments.
The bank also stated that it will work with credit bureaus to correct customers’ credit records, if needed.
Washington state’s Office of the Insurance Commissioner told The News Tribune on Friday that no complaints had been filed so far with them from Washington customers affected by this.
As for next steps, Steve Valandra, a spokesman for the office, said in a statement: “Washington is participating in the National Association of Insurance Commissioners nationwide data call of all lender-placed homeowner and auto insurance, which will include National General’s Wells Fargo products.
“Insurance regulators don’t have oversight of lenders, so insurance regulators will work with others states’ financial regulators to approach the lenders about any practices that are not legal.”
Affected consumers in this state can file complaints with the insurance commissioner’s office online at www.insurance.wa.gov
