Exclusive: N.Y. regulator subpoenas Wells Fargo over unwanted auto insurance

FILE PHOTO: Wells Fargo branch in the Chicago suburb of Evanston Illinois
FILE PHOTO: A Wells Fargo branch is seen in the Chicago suburb of Evanston, Illinois, U.S. on February 10, 2015. REUTERS/Jim Young/File Photo

August 2, 2017

By Karen Freifeld

NEW YORK (Reuters) – New York state’s banking and insurance regulator has issued subpoenas to two Wells Fargo & Co units after the bank admitted to charging several hundred thousand borrowers for auto insurance they did not ask for or need, causing many delinquencies.

The New York Department of Financial Services is demanding Wells’ loan contracts with New York borrowers, its financing agreements with auto dealers, and agreements between Wells units and insurers, according to copies of the subpoenas that were issued on Tuesday and seen by Reuters.

Unwanted auto insurance is the latest chapter in a months-long scandal over sales practices at Wells, where employees also created as many as 2.1 million deposit and credit card accounts in customers’ names without their permission.

The New York regulator is also seeking documents showing how and when Wells learned its so-called collateral protection insurance may have been unnecessarily or wrongfully issued.

The bank has to provide the information by Aug. 22.

The regulator sent a separate request for information to National General Insurance Co, which was identified as an underwriter of the insurance in a report into the matter prepared for Wells by consultancy Oliver Wyman. The New York Times obtained a copy of the report.

A Wells spokeswoman declined to comment and National General did not immediately respond to a request for comment.

Wells first became aware of potential problems a year ago, when the auto lending business began receiving an unusually high number of complaints, Franklin Codel, head of consumer lending, said in an interview last week.

The bank said it would refund about $80 million to an estimated 570,000 customers who were wrongly charged for auto insurance from 2012 to 2017, including roughly 20,000 whose vehicles were repossessed.

The subpoenas, each of which is nine pages long, were sent to Wells Fargo Bank NA in Saint Louis Park, Minnesota, and Wells Fargo Insurance Services USA Inc in Charlotte, North Carolina.

The subpoenas also request the Wyman consulting firm’s report and any other analyses of policies issued to New York customers.

Separately, New York Attorney General Eric Schneiderman’s office issued a subpoena to Wyman, according to a person familiar with the matter. A spokeswoman for the firm did not immediately respond to a request for comment.

(Editing by Carmel Crimmins and Tom Brown)

  • Localdude

    I wont even speak with them when I walk in, ‘just the present transaction please’…they always persist, its crazy rude, just telemarketers in person. Same tactics. Chase and BofA is the same, they want to seat you and have a conversation, like its ‘friendly’ or something. They reduced the teller windows, I just want to cash a customers check and run out, not buy a used car. Its creepy doing banking in person with these thieves for the past 10 years it seems, just goes on and on. They got bailed out in 08, used the money to expand and buy each other. They got rich and the USA is stuck with the bill for the next 100 years.

  • tdf050658

    Never, ever sign a contract without reading it. My husband always read the whole contract and has caught this type of thing on sales contracts from several places and had it removed from the contract.

  • EjB

    Wells Fargo sucks. I had that bank for three years and they were nothing but trouble.

    • donnieboy64

      my son’s mortgage is with wf and i tell ya they’re a friggin mess. total chaos over there.

      • EjB

        They are. I believe it. I’ll never do business with them again.

  • Howard Essig

    John Gotti and Al Capone were definitely in the wrong business.

  • “I’m a Rooster!”

    “Their britches have seemed to get a little too large for ’em”