Wells in another scandal, this time in auto lending

Bank says scandal may have cost about 20,000 people their cars

NEW YORK, July 29, (AP): Scandalplagued Wells Fargo is back in hot water for signing customers up for products that they didn’t need or want. This time it’s auto insurance, and the bank says it may have cost about 20,000 people their cars.

San Francisco-based Wells Fargo acknowledged late Thursday that it enrolled roughly 570,000 auto loan borrowers for what’s known as collateral production insurance on their vehicles when the customers already had appropriate insurance. It will pay $80 million in refunds and account adjustments to those people. “We take full responsibility for our failure ... and are extremely sorry for any harm this caused our customers, who expect and deserve better from us,” said Franklin Codel, the head of Wells Fargo Consumer Lending, in a statement.

If the situation seems familiar, it is. Nearly a year ago, Wells Fargo admitted that its employees opened up to 2 million accounts for customers without getting their permission in order to meet

In this file photo, Wells Fargo CEO & President Timothy Sloan is interviewed in one of his bank’s branches in New York. Scandal-plagued Wells Fargo is back in hot water for signing customers up for products that they didn’t need or want. (AP)

overly aggressive sales goals. The bank paid $180 million in fines and penalties and recently reached a settlement to pay an additional $142 million to customers through a class-action lawsuit.

That scandal cost then-CEO John Stumpf his job, and the bank’s oncesterling industry reputation was in tatters. The bank’s new management has been trying to amends with customers, politicians and the public ever since.

Politicians from both parties were angry with Wells Fargo when the scandal broke last year, and a couple highprofile Democrats were quick to turn up the heat again.

“The constant drip drop of fraudulent activities coming out of Wells Fargo is absolutely outrageous,” said Rep Maxine Waters of California, the topranking Democrat on the House Financial Services Committee. Sen Elizabeth Warren of Massachusetts called for the Federal Reserve to remove Wells’ board of directors. This is not the first time Wells Fargo’s auto lending business has come under scrutiny. The bank reached a $4 million settlement with the Justice Department last September for illegally repossessing vehicles from servicemen and women.

In this case, the bank reviewed auto policies placed between 2012 and 2017. Like most auto loan companies, Wells Fargo required borrowers to have comprehensive and collision insurance. If they didn’t have comprehensive coverage, Wells would purchase it for the customer and charge them for it.

Wells acknowledged its systems signed up customers who already had insurance. Worse, roughly 20,000 customers were unable to afford the car payment plus the insurance that some did not realize had been added to what they owed, and that “may have contributed to a default that led to their vehicle’s repossession,” the bank said.