A California federal judge dismissed some of the harshest claims posed in a class-action lawsuit against Wells Fargo & Co. and National General Insurance this week, but ultimately allowed the case to continue on the grounds that certain of the lender’s force-placed insurance charges were “unfair.”
Wells Fargo allegedly charged more than 800,000 consumers for force-placed collateral protection insurance they didn’t want and didn’t need, and in April agreed to a $1 billion consent order from the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency.
Yet, the class action lawsuit against the company continues, despite U.S. District Judge Andrew Guilford dismissing charges that the companies conspired to charge consumers more, as well as claims of racketeering activity, and fraudulent concealment.
One allegation did stick though: the class actions’ claims that the companies violated California’s Unfair Competition Law.
“As plaintiffs put it, ‘force-placing duplicative, unwanted, and unnecessary [collateral protection insurance] on at least 800,000 consumers’ is unfair,” Guilford said.
Wells Fargo was scheduled to pay the $1 billion consent order fine this week, as well as submit a remediation plan for consumers. However, the company has yet to announce the plan.
The consent order noted that Wells Fargo has successfully identified 570,000 consumers who were overcharged for the entire length of the term. Yet, there are an unknown number of consumers who were served duplicative charges for only a portion of the full term.
A report claims the policy sent 274,000 borrowers into delinquency and resulted in 25,000 wrongful repossessions.
Auto Finance News has requested comment from Wells Fargo. At presstime, no comment has been provided.
