Torben Rick

Charged customers for unwanted insurance

Another disaster for Wells Fargo – When something is rotten

Nearly a year ago, Wells Fargo admitted that its employees opened up to 2 million accounts for customers without getting their permission in order to meet overly aggressive sales goals. The bank paid $180 million in fines and penalties and recently reached a settlement to pay an additional $142 million to customers through a class-action lawsuit.

But scandal-plagued Wells Fargo is back in hot water for signing customers up for products that they didn’t need or want. This time it’s auto insurance, and the bank says that it enrolled roughly 800.000 auto loan borrowers for what’s known as collateral production insurance on their vehicles when the customers already had appropriate insurance.

Wells Fargo and other lenders typically require that auto-loan customers have such policies. Some lenders will buy a policy on customers’ behalf and pass along the cost if customers do not show they have secured their own auto insurance coverage.

In this case, though, Wells Fargo acknowledged that it improperly bought such policies on behalf of customers who already had their own insurance, and sometimes failed to properly notify those customers that it was doing so.

The bank said some 20.000 customers lost their vehicles because the cost of the unnecessary insurance pushed borrowers into default on their loans.

→ Read more: When organizational culture needs to change fundamentally

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Organizational culture that crushed reputation — https://www.torbenrick.eu/t/r/bty
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