Wells Fargo to pay at least $385 million to settle scam allegations

 

Wells Fargo agreed to pay at least $385 million to settle a class-action lawsuit that it allegedly scammed millions of auto-loan customers into buying insurance they didn’t need. The settlement covers customers who were bilked out of tens of millions of dollars for about 11 years through September 2016, according to court papers filed in Central California federal court. National General Insurance, which was allegedly in cahoots with the bank to place the unnecessary insurance with the customers, will also pay $7.5 million to the class. The US’ third-biggest bank and the insurer “engaged in a more than decade-long scheme that forced millions of Wells Fargo customers to pay for [insurance] they did not need or want, bilking tens of millions of dollars from them in the process,” according to the court filing. The agreement, which is about six times higher than the $64 million Wells initially proposed, will also compensate customers whose credit scores were harmed because of the scam, and pay back customers who lost their vehicles because they couldn’t afford the unnecessary insurance, according to the filing. The total settlement, which still has to get approved by a judge, is likely to be much higher than the total $393.5 million, since lawyers’ fees are not included in the settlement. The alleged scam is one of many that have come to light in the wake of revelations that Wells had opened millions of fake accounts and credit cards in order to meet arbitrary quotas — and inadvertently harmed customers with bruised credit scores and erroneous fees. “Reaching this agreement, which leverages remedies available in our existing remediation plan, is an important step in making things right for customers impacted by this issue,” Nicole Brown, a spokeswoman for Wells Fargo, said in a statement. “We will continue sending individualized letters to customers that clearly set out the remediation amount due to them, as well as a check for that amount. This process will continue until the remediation is complete.”