Beleaguered Wells Fargo, under investigation for making hundreds of thousands of customers pay for car insurance they didn’t need, has apologized — and blamed a contractor.
California’s Department of Insurance is probing the San Francisco-based bank to find out if it broke state laws by charging auto-loan borrowers for “collateral protection insurance,” according to the Los Angeles Times.
“Wells Fargo acknowledged late last month … that more than 500,000 borrowers were either forced to pay for these policies despite having their own coverage or were not properly notified about the policies,” the newspaper reported.
“The bank said that for about 20,000 customers, the added cost of unnecessary or hidden insurance policies may have contributed to loan defaults and repossessed vehicles.”
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Wells Fargo has now said in a statement that it’s “extremely sorry for any harm this caused our customers, who expect and deserve better from us.”
But it wasn’t the bank that was initially responsible for the problems, according to the bank, which pinned blame on a third-party vendor and “processes used by the vendor to determine when the insurance required by the customer’s loan contract lapsed.”
To be sure, Wells Fargo was willing to take some lumps.
“The lesson we’ve learned — and take full responsibility for — is letting our oversight of our vendor lapse and not ensuring stronger internal controls,” Franklin Codel, head of consumer lending for the bank, said in a statement.
“We let our customers down by not reviewing our own practices often enough and double checking the work a vendor was doing on our behalf.”
Wells Fargo will give about $64 million in cash to affected borrowers, and will make $16 million in “account adjustments,” the bank said.
For Wells Fargo, which has paid millions in fines for creating millions of credit card and bank accounts customers never asked for, has additional insurance-related problems. The Federal Reserve Bank of San Francisco is investigating Wells Fargo for allegedly failing to refund specialized auto insurance money to people who paid off vehicle loans early, according to the New York Times.
“Tens of thousands of customers may have been affected by the bank’s actions,” the paper reported.
A bank spokeswoman told the Times in a statement that it was examining its practices and if it finds “customer impacts” it will “make customers whole.”
Again, this was an oversight issue, the bank said.
“During an internal review, we discovered issues related to a lack of oversight and controls surrounding the administration of (the insurance) products,” the spokeswoman said.
Photo: Wells Fargo in San Francisco (Wikimedia Commons/NoeHill)
Tags: auto loans, bank, investigation, loans, Wells Fargo