Plaintiffs Fight Dismissal of Wells Fargo Auto Insurance Class Action

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A group of plaintiffs have asked a California federal judge to deny a motion by Wells Fargo and National General Insurance to dismiss a consolidated class action lawsuit accusing them of charging auto loan borrowers for unnecessary collateral protection insurance (CPI).

They filed the motion the same day that the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency announced that Wells Fargo agreed to pay $1 billion for improperly charging consumers fees on mortgage and auto loans.

“Wells Fargo has largely admitted this misconduct,” the plaintiffs say in their motion. “However, despite paying regulators a $1 billion fine for conduct which harmed Wells Fargo’s customers, Wells Fargo remarkably attempts to prevent such customers from seeking a recovery too.”

According to the plaintiffs,Wells Fargo had argued the consolidated collateral protection insurance class action lawsuit should be dismissed because the claims lacked “specificity.”

“In light of the $1 billion fine and the Consent Orders–which confirm the essential allegations of [the Wells Fargo class action lawsuit]–Defendants’ arguments in support of their Motions to Dismiss border on frivolous,” the plaintiffs say.

Wells Fargo reportedly admits that it force-placed CPI policies from 2005 to 2016 on more than 800,000 auto loan customers that included kickbacks in the form of unearned commissions.

As part of the alleged scheme, Wells Fargo reportedly provided customer information to National General and its predecessors, which either failed to check for proof of insurance or ignored it, before issuing the overpriced CPI policies, which Wells Fargo then force-placed on its auto loan customers.

These policies were often unnecessary because consumers already had their own insurance policies.

“Defendants’ misconduct was not a mere failure of oversight, but rather a deliberate scheme between Wells Fargo and its underwriters to bilk millions of dollars from unsuspecting consumers,” the plaintiffs allege.

As a result of this alleged misconduct by Wells Fargo, auto loan customers suffered harm such as late charges, vehicle repossession, and adverse credit reporting.

These practices allegedly caused more than 274,000 account delinquencies and 25,000 vehicle repossessions.

The plaintiffs allege they would not have borrowed from Wells Fargo or paid for the force-placed insurance policies if they had known about the scheme.

Paul Hancock filed the Wells Fargo auto insurance class action lawsuit after an article published in The New York Times on July 27, 2017 revealed details from a leaked investigative report that had been commissioned by Wells Fargo about their allegedly improper auto insurance practices.

The Wells Fargo class action lawsuit was consolidated into multidistrict litigation, and a new complaint was filed on Jan. 26, 2018. The plaintiffs allege Wells Fargo and its underwriters violated the Racketeer Influenced and Corrupt Organizations Act.

A hearing has been scheduled for June 4, 2018.

The plaintiffs are represented by Roland Tellis, Dan Alberstone, Mark Pifko, Sterling Cluff and David Fernandes of Baron & Budd PC; Roman M. Silberfeld, Aaron M. Sheanin, Kellie Lerner, Benjamin D. Steinberg and Shannon R. Rozell of Robins Kaplan LLP; Eric H. Gibbs and Michael L. Schrag of the Gibbs Law Group LLP; Charles E. Schaffer of Levin Sedran & Berman; Paul F. Novak of Weitz & Luxenberg PC; and David S. Casey Jr. and Gayle M. Blatt of Casey Gerry Schenk Francavilla Blatt & Penfield LLP.

The Wells Fargo Auto Insurance Class Action Lawsuit is In re: Wells Fargo Collateral Protection Insurance LItigation, Case No. 8:17-ml-02797, in the U.S. District Court for the Central District of California.

UPDATE: On June 6, 2019, customers accusing Wells Fargo and National General Insurance of tacking on unnecessary auto insurance to boost car loan bills are requesting approval of a $393.5 million settlement.

UPDATE 2: August 2019, the Wells Fargo auto loan insurance class action settlement is now open. Click here to learn more.