Auto Loans the Subject of Latest Scandal for Wells Fargo
Wells Fargo is once again the subject of public criticism not even a year after its major fake account scandal. This time, the subject is how the company issues automotive loans.
The New York Times recently broke the news of a Federal Reserve Bank of San Francisco investigation into Wells Fargo’s auto loan policies after the bank allegedly failed to provide refunds on specialized policies when people paid off their loans early.
The investigation came after the bank disclosed earlier this summer that at least 800,000 customers over the course of four years were charged for different types of auto insurance they did not actually need. Wells Fargo found that in issuing its auto loans, the bank had purchased collision insurance and was charging customers for it, even in situations in which the customers already had that coverage in place. The bank announced plans to begin issuing about $80 million in refunds in August.
Details about the investigation
The current investigation in San Francisco centers on guaranteed auto protection insurance, referred to commonly as GAP. A car’s value begins to decrease as soon as you drive it off the lot, so GAP insurance helps people to be protected from potential shortfalls if the value of the car falls below the amount of the vehicle still owed. The policy usually costs between $300 and $700. If you pay back the loan early, however, you are typically entitled to a refund of the remaining insurance.
According to the New York Times report, this did not always happen with Wells Fargo loans. A judge already granted preliminary approval for a $142 million national class action settlement for all affected customers.
Cases like this are often broke open by whistleblowers who report useful information to the federal government. For more information on how to proceed with a claim, work with a skilled Dallas attorney at Whistleblower Law for Managers.