Wells Fargo Dealer Services is prepared to refund $80 million to borrowers wrongly charged for collateral protection insurance (CPI), but the lender is still determining the full impact this policy had on active-duty servicemembers, a spokeswoman told Auto Finance News.
“We are reviewing accounts now to determine how many impacted customers are also active-duty servicemembers,” she said. “This process involves reviewing the Department of Defense’s Defense Manpower Data Center and account records to determine active-duty status. Once we understand the situation more completely, we will reach out to these customers to make things right, including refunding fees and charges as a result of inappropriately placed CPI.”
Back in September 2016, Wells Fargo Dealer Services paid $24 million in a consent order issued by the Department of Justice and Office of the Comptroller of the Currency for 413 illegal repossessions of servicemember vehicles. Prior to that consent order, the lender commissioned an investigation into its insurance policies, which found that CPI was the cause of some 25,000 wrongful vehicle repossessions — Wells Fargo now claims that number is closer to 20,000 total repossessions — including an undetermined number of active-duty servicemembers.
Some even took to the Consumer Financial Protection Bureau’s complaints database to air their grievances. “The vehicle was insured and covered by law,” an anonymous Wells Fargo borrower posted in December 2015. “During [my 12-month deployment], Wells Fargo Dealer Services implemented their own insurance and charged me discreetly. This has caused my loan to fall into delinquency.”
For more coverage of Wells Fargo’s insurance practices click here.
