Report: Bank Forced Auto Insurance on Unsuspecting Borrowers
A internal report from executives at Wells Fargo has determined more than 800,000 people who took out loans for their vehicles were forced into buying unnecessary auto insurance. Some of those people are still paying for the coverage, and the expense has pushed a quarter million of them into delinquency. Additionally, some 25,000 people suffered wrongful vehicle possessions as a result of this practice. The 60-page report was obtained by New York Times reporters, who noted that some of those affected included members of the U.S. military who were on active duty.
As our debt defense lawyers know well, this is not the first time Wells Fargo has landed in hot water for strong-arming customers into coverage or accounts they did not need. Most recently, the company incurred millions of dollars in fines when it was revealed employees generated millions of bank accounts and credit cards for which customers never asked. The fines were imposed on the bank just last year. This is the same financial institution that allegedly made improper adjustment to home loans of consumers who were in the midst of bankruptcy. Although Wells Fargo vehemently denies this accusation, a class action lawsuit is pending. The changes made by the bank often reduced their monthly mortgage payments, which some customers initially viewed as a welcome reprieve. But of course, there was a catch: The home loans were extended by a term of several decades, which meant the monthly payments dragged on for much longer than they otherwise would have, and in turn meant customers were going to have to pay the bank much more in the end. Some customers might have still preferred this option, but the problem is such decisions about the finances of individuals in the midst of a bankruptcy have to be approved not just by all the parties involved, but also the court. The allegation is that Wells Fargo never got this approval. Further, these changes put consumers at risk of potentially defaulting on previous commitments made to the court, which meant they would be at even higher risk of foreclosure.
When questioned about this most recent report, a spokesman for the bank acknowledged the insurance was improper and said the bank was vowing to make those customers whole.
The report was generated by a law firm contracted by the bank.
The practice of unnecessary auto loans started sometime in early 2006, and continued through last September. The company that underwrote those loans declined to comment.
Consumers were vulnerable to delinquency on their auto loans because of the way in which the bank charged them for insurance. For instance, if a borrower signed off on a monthly payment of $275 for the vehicle and had that amount automatically deducted from her account each month, she would not have been told that the actual monthly charge – with the added auto insurance – increased the payment by $50. That could lead to the account being overdrawn and loans going into default.
The bank’s report estimates the bank owes about $73 million to customers wronged by the practice.
Debt defense lawyers in Miami encourage those who believe they may have been affected to contact our offices to learn more about their rights.
If you’re battling debt collection in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday at 5 p.m. on “Debt Warriors with Bruce Jacobs and Court Keeley,” discussing foreclosure topics that matter to YOU.