Our attorneys are litigating a class action lawsuit alleging that Wells Fargo charged auto loan consumers for auto insurance that they did not want or need. Read a copy of the lawsuit here.
Have a car loan through Wells Fargo?
You may be impacted by our lawsuit if:
- You have a car financed through Wells Fargo, and
- Wells Fargo took out an auto insurance policy on your car without your knowledge or consent, and
- You already had your own car insurance policy
Speak with a consumer protection attorney.
All consultations free and confidential.
Girard Gibbs Attorneys Appointed to Leadership Position
Cases have been filed across the country accusing Wells Fargo of charging customers for unwanted and unneeded auto insurance. A federal panel of judges consolidated these cases and sent them to the courtroom of Judge Andrew Guileford in California.
On December 11, 2017, Judge Guileford issued an order appointing six law firms, including Gibbs Law Group, to help direct the litigation. Gibbs Law Group will serve on the Plaintiffs’ Steering Committee.
Wells Fargo's Force-Placed Insurance
Force-placed or lender-placed insurance is an insurance policy that a bank buys at the borrower’s expense, claiming the right to do so under the loan contract. Lawsuits have already occurred in the mortgage context over force-placed insurance clauses, which allow the bank to take out home insurance policies for consumers who don’t have them, without their approval. The bank then adds the cost of this insurance to the home loan amount, increasing the monthly payment.
As The New York Times reports, force-placed insurance clauses are “common in the mortgage arena,” but “not as common” for auto loans: representatives for Bank of America, Citibank, and JPMorgan Chase said their banks did not force-place insurance for auto loans.
However, the NYT recently reported that over “800,000 people who took out car loans from Wells Fargo were charged for auto insurance they did not need.” Wells Fargo allegedly forced insurance on these 800,000 people even though they already had their auto own insurance policies. According to the NYT, the “expense of the unneeded insurance, which covered collision damage, pushed roughly 274,000 Wells Fargo customers into delinquency and resulted in almost 25,000 wrongful vehicle repossessions.”
The NYT obtained these numbers from a 60-page Wells Fargo internal report, written by a management consulting firm for the bank’s top executives.
Forced Insurance Earned Wells Fargo Commissions, Increased Interest Profits
The NYT reports that Wells Fargo began force-placing insurance on auto loan customers in 2006, issuing the policies through an insurance company called National General Insurance. National and Wells Fargo split the commissions on the insurance forced upon Wells Fargo borrowers, the NYT reports, until 2013.
Starting in 2013, Wells Fargo allowed National to keep the full commissions, but, according to the NYT, Wells Fargo still profited from the force-placed insurance because it increased some customers’ loan principal, which raised the amount of interest that Wells Fargo collected on their loans.
Customers Weren’t Notified When New Policies Were Placed
The report indicated that many of the 800,000 people did not seem to realize that they were being charged for force-placed insurance. The NYT suggests “this may have been because their payments were deducted automatically from their bank accounts and they did not spot the charges.”
The NYT reports that when a customer financed their car, National was supposed to “check a database” to see if the owner already had insurance coverage. If the database said the customer did not have insurance, National “would automatically impose coverage on the customers’ accounts,” the NYT reported. The paper further reported they would do this, even though “state insurance regulations required Wells Fargo to notify customers of the insurance before it was imposed.”
Our Commitment to Excellence
Girard Gibbs LLP has earned Tier-1 rankings for Mass Tort and Class Action Litigation and has been named in the U.S. News – Best Lawyers “Best Law Firms” list for four consecutive years since 2013.
We have recovered over a billion dollars for our clients against the world’s largest corporations in cases concerning auto defects, drug and medical device injuries, data breaches, securities fraud, antitrust matters, and employment law violations.
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