Wells Fargo Sued for Allegedly Knowing Auto Insurance Hurt Customers
When James Strother retired as general counsel of Wells Fargo, he hoped to leave all that behind him.
Strother retired last year after 30 years with the company and its predecessor, including a sales scandal that kept him from leaving at the mandatory retirement age. Now another legal problem has brought him back into the mix.
A new lawsuit claims Strother and other Wells Fargo executives knew its auto insurance program was hurting customers, but kept it going for years. The legal scandals, meanwhile, never seem to end.
It started in 2013, when the Los Angeles Times exposed how the bank pressured employees to create fake accounts to generate fees. It has cost the company hundreds of millions in penalties and fees.
The fallout, reports said later, could cost the company hundreds of billions in deposits, market share, and revenue. By 2017, top executives had lost their jobs but Strother stayed on to deal with the continuing problems.
According to the latest lawsuit, Wells Fargo charged hundreds of thousands of borrows for collateral protection insurance -- auto insurance they didn't need. The complaint says that the bank's executive risk management committee knew about the CPI program in 2012.
"Although senior Wells Fargo executives had long known that the CPI scheme harmed customers, Wells Fargo only shut it down in September 2016," according to the proposed class action.
Wells Fargo admitted the problem last year, but the details came out after a judge unsealed the court filing. The bank said it has set aside $241 million in the third quarter to go towards refunds.
The company said that up to 570,000 customers were charged for CPI insurance without their knowledge. As many as 20,000 may have defaulted on their loans or had their vehicles repossessed.
The CPI scheme comes after the original fake accounts scandal and a subsequent mortgage scam. In the mortgage case, Wells Fargo said it charged homebuyers fees they didn't deserve.
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