Weitz & Luxenberg filed a lawsuit against Wells Fargo and insurance giant National General for forcing auto loan customers to pay for auto insurance that wasn’t required. The lawsuit was filed on behalf of a customer who was repeatedly ignored by the bank when he tried to cancel the additional coverage and then charged more than the cost of his loan’s monthly payment to cover the second unwanted policy.
“When these customers went to Wells Fargo for an auto loan, they were not signing on for expensive insurance that they didn’t want or need,” said Robin Greenwald, head of Weitz & Luxenberg’s Environmental and Consumer Protection Unit. “The bank and insurer took advantage of these trusting consumers, putting thousands into financial difficulties that were beyond their control. Wells Fargo and National General Insurance must answer for their unlawful actions and should compensate those harmed by this reckless scheme.”
According to the lawsuit, which was filed in Manhattan federal court, Wells Fargo and its insurance provider, National General, never checked if loan customers had existing policies, and instead imposed redundant coverage that was often more expensive than what customers could obtain on their own. Frequently, the cost for the additional insurance was deducted automatically from the customers’ bank accounts along with the scheduled payments for the loan.
Wells Fargo has admitted that more than 800,000 auto loan customers were forced to pay for unnecessary insurance policies. These additional, unapproved insurance payments pushed nearly 250,000 customers into delinquency and led to more than 25,000 cars being repossessed.
“Thousands had their cars unfairly taken and their credit marred because of Wells Fargo and National General Insurance, companies that were supposed to help customers not bilk them,” said Curt Marshall, associate attorney in Weitz & Luxenberg’s Environmental and Consumer Protection Unit. “This lawsuit makes it clear that these companies will be held responsible for their deceptive practices.”
The plaintiff in the case is a Brooklyn resident who bought a car with financing from Wells Fargo in 2012. Despite repeatedly telling Wells Fargo that he already had auto insurance and providing proof, the bank demanded the additional insurance and increasingly raised his monthly loan amount to pay for the policy. As a result, the term of the loan was extended by several years at significant financial expense to the plaintiff.