Wells Fargo Dealer Services has to contend with a subpoena from the N.Y. Department of Financial Services, at least three lawsuits from consumers claiming significant financial harm, and calls from Washington, D.C., for a Congressional investigation into the lender’s practices, following the revelation of its latest scandal.
Last week, Wells Fargo confirmed that its collateral protection insurance policy — which identifies consumers who lack auto insurance and charges them automatically — falsely charged 570,000 borrowers, sent 274,000 into delinquency, and resulted in 20,000 repossessions. An internal report obtained by The New York Times describes larger figures of 800,000 affected borrowers and 25,000 repossessions — some of which were active-duty servicemembers.
Wells Fargo agreed to pay $80 million “proactively” in remediations to affected consumers, however, it’s unclear what other costs might pile on from lawsuits and regulatory actions.
Seven Democratic senators this week sent a letter to the lender saying they are “extremely concerned” about the “seemingly endless chronicle of Wells Fargo’s fraudulent practices and widespread misconduct,” and called it “eerily familiar” to last year’s faked checking accounts scandal.
In July 2016, Wells Fargo said it initiated a review of the insurance practice and by September had discontinued the program — the same month the lender was charged $24 million in a consent order for illegal repossession of servicemembers’ vehicles.
Ally Financial Inc., Bank of America Dealer Financial Services, Capital One Auto Finance Inc., Chase Auto Finance, and Santander Consumer USA all confirmed that they don’t engage in collateral protection insurance practices.