Theo Thimou, Clark.com
In what seems to be a never-ending saga of customer abuse, here’s the latest chapter for Wells Fargo…
The embattled bank now looks likely to face sanctions because it profited from what’s known as “forced place” insurance on customers who borrowed money to buy a car.
Bank received commissions from insurance customers didn’t need
Reuters reports that federal regulators are readying a new round of penalties for Wells Fargo.
At issue this time is the fact that the bank was compensated every time unnecessary auto insurance policies were crammed down the throats of more than half a million drivers who already had insurance.
In July 2017, Wells Fargo admitted that it required auto loan customers to maintain collateral-protection insurance even if they had their own vehicle insurance.
At that time, the bank agreed to refund $80 million for nearly 600,000 affected customers.
But previously the bank did not fess up to receiving any payout stemming from the issue of extra auto insurance policies.
Now, however, Wells Fargo is admitting to receiving commissions from insurance partners each time a “forced place” insurance policy was written on one of its 570,000 auto loan customers who already had their own coverage.
The bank will now have to make an estimated $182 million in account balance adjustments and refunds to affected consumers, according to Reuters. That’s up more than 100% from the initial cost estimate of $80 million back in 2017.
In addition, unnamed sources familiar with the matter say regulators are also preparing to levy additional fines against the bank. No word yet on what those could amount to because this regulatory action is still pending.
Not the first instance of a “forced place” abuse
As you probably already know, this isn’t the only instance of Wells Fargo forcing financial products on customers who don’t want them or need them.
In 2016, the bank over-insured one homeowner with a costlier flood insurance policy and gave him a hard time when he wanted his coverage reduced.
While that appears to have been an isolated instance, who can forget the national scandal that erupted two years ago when it came to light that Wells Fargo opened millions of phantom accounts to meet sales quotas?
That is the ultimate example of forcing unwanted bank products on unsuspecting customers!
As money expert Clark Howard has long said, it’s not a question of if, but when, you’ll get ripped off your big bank.
So let this serve as a wake-up call to you if you’ve just been going along on cruise control with your giant monster mega-bank — be it Bank of America, Citigroup, JP Morgan Chase or Wells Fargo.
It’s Clark’s belief that you’d be better served taking your business to any of our nation’s many small local banks, regional banks and especially credit unions. You can visit ASmarterChoice.org to find a credit union near you.