After settling one class action lawsuit involving the exploitation of customers by opening bogus credit card and savings accounts to meet sales goals, Wells Fargo faces another lawsuit involving its auto lending business and unnecessary auto insurance policies.
A borrower who financed an automobile in February 2016 through Wells Fargo filed a lawsuit in U.S. District Court in San Francisco on Sunday, July 30, claiming he was charged for insurance he did not need and is seeking class-action status to represent all U.S. borrowers in the same situation.
After more customer complaints, an internal investigation revealed that some 490,000 customers were charged for auto insurance they did not need and an additional 60,000 customers in states with specific disclosure requirements may not have been told about the insurance by the third-party vendor that issued it.
The loan contracts required customers to maintain auto insurance and allowed Wells Fargo to purchase it for them if the customer did not have insurance with another company. Some 20,000 customers may have defaulted on loans and had their cars repossessed because of the additional charges, the bank said.
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