Yahoo Autos Wells Fargo Faces $1 Billion Fine over Auto-Insurance Abuses
Wells Fargo, one of the largest automotive lenders in the United States, faces $1 billion in fines from federal regulators over abuses in auto insurance and mortgage lending. The proposed penalty was announced by the San Francisco–based bank Friday as it released its first-quarter results. But those results are subject to change, thanks to looming penalties from the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC).
It’s not clear whether the fines include both the company’s improper handling of gap insurance and the bank's charging borrowers for excess auto coverage. A spokeswoman for Wells Fargo declined to comment on the fine beyond what was in Friday’s press release. She said the company continues to refund customers and work with federal regulators on a remediation plan.
For the duplicate auto coverage, an internal company report found that when consumers financed a vehicle through Wells Fargo, in some cases collision coverage was added even when the buyer already had insurance. The lender announced a plan last July for about $80 million in remediation to the 570,000 customers who had been impacted, including some 20,000 people who lost their vehicles because of excess costs. It had planned to complete that reimbursement process by the end of 2017.
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Separately, the bank said last August that during an internal review, it had found that some gap-insurance coverage had not been refunded. The bank told C/D at the time that it was in the process of refunding affected customers.
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