CFPB Complaints Reveal Extent of Wells Fargo’s Insurance Scandal

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The Consumer Financial Protection Bureau could neither confirm nor deny the existence of an ongoing investigation into Wells Fargo Dealer Services in regards to its practice of automatically charging consumers for insurance they already purchased elsewhere, according to a Freedom of Information Request made by Auto Finance News.

However, public consumer complaints filed to the CFPB show that the issue has been ongoing and acknowledged by the bureau in the database.

“Upon viewing my payments online, I noticed the collateral protection charge is still factored in to the amount and now saying I owe $1,100,” a Wells Fargo consumer wrote to the bureau in June 2016. “This is absurd, I am a single parent with [redacted] kids and I work [redacted] jobs just to make ends meet. For Wells Fargo to take advantage of me and mislead me by adding on collateral protection insurance of their own, when I have sent valid proof that I had valid coverage insurance — it shows the length a big company like Wells Fargo would go through to deceive good paying consumers.”

The database indicates that the bank responded to the consumer’s complaint but chose not to make it public.  

Wells Fargo last week agreed to pay $80 million in remediations to 570,000 borrowers, 274,000 of which went into delinquency and 20,000 of which had their vehicle repossessed. 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.

There are numerous accounts of the problem detailed in the CFPB’s database including those who went into delinquency, had their car repossessed, and experienced a negative impact on their credit score.

“I could never have imagined that a company I supported this much would be the one to destroy my credit worthiness by reporting me late and by closing my account when I have made all my payments to date,” another 15-year consumer of Wells Fargo wrote to the bureau, detailing how they were charged for insurance they didn’t need. “My credit worthiness is under attack and my Fico score has dipped negatively. The incorrect credit report needs to be corrected; the late fees need to be removed; and the harassing phone calls need to be stopped.”

Wells Fargo said in a press release that it will work with the credit bureaus to correct customers’ credit records.

Wells Fargo’s banking division is still reeling from last years fake checking accounts scandal, which resulted in a CFPB fine of $100 million — the largest in the bureau’s history.

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.

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As Assistant Editor at Auto Finance News, William specializes in covering compliance, operations, and subprime issues. As a Brooklyn implant by way of Ohio, he's happy to discuss the triumphs and pitfalls of Cleveland sports as well as the latest music trends. Former bylines include Candy & Snack Today, Inverse, and The Tennessean.

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4 thoughts on “CFPB Complaints Reveal Extent of Wells Fargo’s Insurance Scandal

  1. […] 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. […]

  2. […] loans” as well as a moratorium on “certain repossessions” for consumers affected by the force-placed insurance scandal that broke last year. The company improperly charged consumers for insurance they did not need, […]

  3. […] asked about whether the collateral protection insurance scandal is an industry-wide issue or isolated to the bank, Sloan said it was an issue with the company’s […]