Wells Fargo Auto Insurance Lawsuit Settlement

The settlement in the Wells Fargo unwanted auto insurance lawsuit has been preliminarily approved by the Court and the settlement checks are being mailed out to eligible customers. The process is expected to take until early 2020, as there are hundreds of thousands of eligible class members to compensate.

The settlement requires Wells Fargo to compensate eligible customers who had unwanted insurance on their auto loan accounts between October 15, 2005 to September 30, 2016. Payments will automatically be mailed to all eligible customers. Customers do not need to submit anything to receive a payment.

The amount of each customer’s payment will be based on the impact that the unwanted insurance had on his or her account, and may include: a refund for unnecessary insurance premiums, interest charges that were assessed for the unnecessary insurance, as well as a refund for car repossession costs. The settlement also provides for eligible class members to receive credit report adjustments for negative credit marks resulting from the unwanted auto insurance.

For more information on the settlement, visit http://www.wellsfargocpisettlement.com/en. You can call the settlement administrator at 1-877-641-8815 if you have further questions.

The court will hold a hearing for final approval of the settlement on October 28, 2019.

After almost two years of hard work on this case, we have reached a proposed settlement. Wells Fargo has agreed to pay at least $393.5 million to those that were force-placed into auto insurance. This settlement is a huge accomplishment: over $300 million more than Wells Fargo’s original proposal for remediation, according to the motion for preliminary approval. Settlement class members will automatically receive checks in the mail if the settlement is approved.

What are you entitled to?

All Residents of Arkansas, Michigan, Mississippi, Tennessee, or Washington

If Wells Fargo force placed auto insurance on your car between 2011 and 2016, you are entitled to, among other things, a refund of all premiums and fees for forced insurance and compensation for lost use of those funds.

Residents of Other States Who Had Their Own Car Insurance

If you were charged for a force-placed auto insurance policy, but had your own auto insurance between 2005 and 2016, you are entitled to, among other things, a refund of all premiums and fees for forced insurance, compensation for lost use of those funds, and adjustments to adverse credit reporting cause by the forced insurance.

Individuals Who Had Their Vehicle Repossessed

If you fit into one of the first two categories and you had your vehicle repossessed, you may also be entitled to, among other things, a payment of $4,000 for lost use of the vehicle, as well as a refund for repo costs and lost equity in the vehicle (the difference between the vehicle’s Blue Book value and what it sold for at auction).

Others who don’t fit the criteria above

Wells Fargo has also set aside an addition $1 million to compensate any class members who do not fall under the categories listed above.

For a full list of the settlement benefits, please see the settlement notice.

How to receive your settlement:

There is no need to submit a claim form! All class members will receive notice of the settlement using Wells Fargo’s last known contact and settlement checks will automatically be mailed to each class member.

Cases have been filed across the country accusing Wells Fargo of charging customers for unwanted and unneeded auto insurance. A federal panel of judges consolidated these cases and sent them to the courtroom of Judge Andrew Guileford in California.

On December 11, 2017, Judge Guileford issued an order appointing six law firms, including Gibbs Law Group, to help direct the litigation. Gibbs Law Group will serve on the Plaintiffs’ Steering Committee.

Force-placed or lender-placed insurance is an insurance policy that a bank buys at the borrower’s expense, claiming the right to do so under the loan contract. Lawsuits have already occurred in the mortgage context over force-placed insurance clauses, which allow the bank to take out home insurance policies for consumers who don’t have them, without their approval. The bank then adds the cost of this insurance to the home loan amount, increasing the monthly payment.

As The New York Times reports, force-placed insurance clauses are “common in the mortgage arena,” but “not as common” for auto loans: representatives for Bank of America, Citibank, and JPMorgan Chase said their banks did not force-place insurance for auto loans.

However, the NYT recently reported that over “800,000 people who took out car loans from Wells Fargo were charged for auto insurance they did not need.” Wells Fargo allegedly forced insurance on these 800,000 people even though they already had their auto own insurance policies. According to the NYT, the “expense of the unneeded insurance, which covered collision damage, pushed roughly 274,000 Wells Fargo customers into delinquency and resulted in almost 25,000 wrongful vehicle repossessions.”

The NYT obtained these numbers from a 60-page Wells Fargo internal report, written by a management consulting firm for the bank’s top executives.

Forced Insurance Earned Wells Fargo Commissions, Increased Interest Profits

The NYT reports that Wells Fargo began force-placing insurance on auto loan customers in 2006, issuing the policies through an insurance company called National General Insurance. National and Wells Fargo split the commissions on the insurance forced upon Wells Fargo borrowers, the NYT reports, until 2013.

Starting in 2013, Wells Fargo allowed National to keep the full commissions, but, according to the NYT, Wells Fargo still profited from the force-placed insurance because it increased some customers’ loan principal, which raised the amount of interest that Wells Fargo collected on their loans.

Customers Weren’t Notified When New Policies Were Placed

The report indicated that many of the 800,000 people did not seem to realize that they were being charged for force-placed insurance. The NYT suggests “this may have been because their payments were deducted automatically from their bank accounts and they did not spot the charges.”

The NYT reports that when a customer financed their car, National was supposed to “check a database” to see if the owner already had insurance coverage. If the database said the customer did not have insurance, National “would automatically impose coverage on the customers’ accounts,” the NYT reported. The paper further reported they would do this, even though “state insurance regulations required Wells Fargo to notify customers of the insurance before it was imposed.”

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