The company will likely face additional enforcement actions despite self-reporting 'errors' that led to improper repossessions for some borrowers.
After self-reporting a scandal that may have led to improper vehicle repossessions for some of its auto loan borrowers, Wells Fargo apparently faces several state-level investigations over its 'errors.'The company purchased auto insurance on a customers' behalf to ensure collateral protection coverage. In some cases, the coverage was purchased even if customers already had their own qualifying insurance coverage for the vehicle.
A CNNMoney report details the experience of one particular customer, Samir Hanef, who did not pay close attention to his loan paperwork when Wells Fargo raised the required monthly payment from around $280 to $375 after adding insurance.
Hanef claims his own insurance never lapsed and he always paid more on his loan than the initial minimum payment, so he was unaware of any problem until his vehicle was repossessed. Wells Fargo initially refused to cover the repo fee and the incident 'decimated' Hanef's credit score.
California's Department of Insurance has been ordered to open an investigation into allegations that Wells Fargo and National General Insurance -- the insurance company that profited from the scheme -- charged consumers for "force-placed" auto insurance.
"The department will investigate fully to determine the extent to which California consumers were affected by improper placement of force or lender-placed auto insurance and seek corrective action and penalties in the event that California's consumer protection laws were violated," said commissioner Dave Jones.
The agency is also collaborating with other state insurance regulators that will be opening equivalent investigations. CNNMoney suggests New York regulators have already subpoenaed two Wells Fargo divisions, demanding copies of loan agreements and other documents related to the charges.