Third Lawsuit Filed Against Wells Fargo, National General Over Alleged Auto Insurance Scheme [UPDATE: SETTLED]

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Wells Fargo & Company and National General Insurance Company are facing another proposed class action lawsuit alongside defendants Wells Fargo Bank, N.A. (which does business as Wells Fargo Dealer Services) and National General Holdings Corp. This case, which follows two other lawsuits filed in Mississippi and New York, respectively, alleges the defendants charged approximately 800,000 auto loan borrowers for auto insurance they did not need.

The allegations date back to an article published in The New York Times on July 27, 2017 exposing the defendants’ alleged scheme. The article reportedly revealed that Wells Fargo conspired with National General to impose “force-placed” Collateral Protection Insurance (CPI) on consumers who took out auto loans with Wells Fargo regardless of whether they were already covered under their own insurance policies. As a result, hundreds of thousands of people were charged premiums for redundant insurance protection, 274,000 people defaulted on their auto loans because of the extra charges, and 25,000 borrowers’ vehicles were “wrongfully repossessed,” according to the complaint.

On top of that, the suit claims consumers were initially unaware of the extra charges and, many times, were forced to continue paying CPI premiums even after providing the defendants with proof of insurance. To make things worse, the complaint argues that the defendants’ CPI policies were often more expensive than alternate coverage options and caused many borrowers to incur late fees, insufficient fund charges, damage to their credit, and extra costs associated with the repossession of their vehicles.