Wells Fargo to pay customers $386 million over auto-loan scandal

by Ryan Smith10 Jun 2019

Wells Fargo will pay at least $386 million to customers affected by one of its more prominent scandals, according to a Reuters report.

Wells Fargo agreed to a proposed settlement to class-action claims that it signed auto-loan customers up for insurance they didn’t need or want. Underwriter National General Insurance Co. will pay another $7.5 million to affected customers, according to Reuters. Wells Fargo and National General will also pay up to $36.5 million for customers’ legal costs.

The scandal-plagued bank denied wrongdoing in the settlement, saying it agreed to the payout to avoid litigation. In an email to Reuters, Wells Fargo called the settlement “an important step in making things right for customers.”

“We will continue sending individualized letters to customers that clearly set out the remediation amount due to them, as well as a check for that amount,” the bank told Reuters.

The auto-loan debacle was one of the megabank’s more prominent scandals in recent years. In April of last year, the Consumer Financial Protection Bureau slapped Wells Fargo with a $1 billion fine for its auto insurance practices and for charging mortgage customers improper rate-lock fees.

All told, the bank charged an estimated 600,000 auto-loan customers for insurance they didn’t need. According to the class-action lawsuit, the bank’s practices caused nearly 275,000 customers to become delinquent on their auto loans and nearly 25,000 vehicles to be illegally repossessed, Reuters reported.