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Wells Fargo Takes 'Important Step in Making Things Right'

Company will pay at least $385M to settle class-action suit on auto loans, car insurance
By Newser Editors and Wire Services
Posted Jun 8, 2019 5:30 AM CDT
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In this March 12, 2019, file photo, Timothy Sloan, then-Wells Fargo CEO, is questioned by the House Financial Services Committee about revelations the bank had created millions of fake bank accounts to reach their financial goals, on Capitol Hill in Washington.   (AP Photo/J. Scott Applewhite, File)
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(Newser) – Wells Fargo has agreed to pay at least $385 million to settle a California lawsuit alleging it signed up thousands of auto loan customers for costly car insurance without their consent, resulting in many having their vehicles repossessed. The bank filed the agreement Thursday in a federal court in Santa Ana. It still needs a judge's approval, per the AP. Another defendant, National General Insurance, agreed to pay $7.5 million, the New York Post reported. Wells Fargo confirmed the agreement Friday and called it "an important step in making things right." The bank's statement said it will be sending checks to affected customers. The 2017 class-action lawsuit alleged that for more than a decade, Wells Fargo tacked on insurance to customers' car loans that they didn't need because they had private insurance.

Some 25,000 car owners couldn't meet the additional fees and had their vehicles repossessed, per the suit. The bank acknowledged in 2017 that $80 million in unnecessary insurance charges had been added to 800,000 auto loans, one in a series of scandals involving the banking giant, starting in 2016 with the uncovering of millions of fake checking accounts its employees opened to meet sales quotas. That led to the resignation of CEO John Stumpf. Last year, the Federal Reserve capped the size of Wells Fargo's assets, and Stumpf's replacement, Tim Sloan, stepped down in March. New improprieties had come to light on his watch, including the auto loan issues. Federal regulators who lost patience with Wells Fargo's continued bad behavior inflicted harsh punishments: Wells had to pay a $1 billion fine last year. But more importantly, the Federal Reserve stepped in and handcuffed Wells' ability to grow its business until the bank could prove it had gotten its house in order. (Read more Wells Fargo stories.)

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