in Newswire Published on October 5, 2017

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

Last Updated on May 8, 2018

Headline v. Wells Fargo & Company et al.

Filed: September 22, 2017 ◆§ 8:17-cv-01718-JLS-DFM

Wells Fargo & Company and National General Insurance Company are two of the defendants in another proposed class action filed against them claiming the companies charged approximately 800,000 auto loan borrowers for auto insurance they did not need.

Defendant(s)

Wells Fargo Dealer Services National General Insurance Company Wells Fargo & Company Wells Fargo Bank, N.A. National General Holdings Corp.

Law(s)

RICO

State(s)

California

June 10, 2019 – Wells Fargo, National General Insurance Agree to $393.5 Million Settlement

Approval is being sought for a $393.5 million settlement that would end multidistrict litigation centered on claims that Wells Fargo and National General Insurance added unnecessary auto insurance to borrowers’ car loans. According to the plaintiffs’ motion for preliminary approval, Wells Fargo, which denies any wrongdoing, will pay at least $386 million in cash compensation to class members. National General is on the hook for $7.5 million, according to court documents, and up to an additional $36.5 million has been earmarked for borrowers’ attorneys’ fees.

Consumers covered by the yet-to-be-approved deal will not need to fill out claims forms or submit documentary proof; settlement checks will be mailed automatically. A hearing is scheduled for July 8, 2019 to conditionally certify the settlement class, appoint a settlement administrator, and set a hearing date for final settlement approval.

The proposed settlement class includes all Wells Fargo Dealer Services customers who had a collateral protection insurance (CPI) policy placed on their account that became effective at any time between October 15, 2005 and September 30, 2016. Also proposed for inclusion in the class are Wells Fargo Auto Finance customers who had a CPI policy placed on their account that became effective at any time between February 2, 2006 and September 1, 2011.

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.

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