PNC Bank Sued in Force-Placed Insurance Class Action Lawsuit

On May 4, PNC Bank and American Security Insurance Co., a subsidiary of Assurant Inc., were sued in a force-placed insurance class action lawsuit, alleging the companies illegally increased force-placed insurance premiums and later profited from insurance kickbacks. Additionally, the complaint that was filed in Pennsylvania federal court claims the defendants violated the Racketeer Influenced and Corrupt Organizations Act by using extortion practices.

Plaintiff Michael Dobson alleges in the PNC class action lawsuit that the bank force-placed overpriced flood insurance on him and his property, even though Dobson claims he pays over $500 for annual flood insurance, which the plaintiff says is sufficient under legal mortgage criteria.

However, in March 2011 PNC claimed Dobson’s flood insurance did not meet insurance coverage criteria. At the time, the plaintiff did not contest PNC’s assessment because he feared his home would be taken from him if he fought back, he claims in the class action lawsuit.

This is not the first time that Assurant or one of its subsidiaries has been implicated in illegal business practices.

Dobson claims Assurant and ASIC have a history of making illegal force-placed insurance agreements with mortgage lenders, allowing them and the lenders to profit off the borrowing consumers by charging them reportedly as much as 10 times the market price for home insurance.

Assurant has been named in multiple class action lawsuits over its force-placed insurance practices, including from borrowers of Wells Fargo, JPMorgan Chase, Citibank, HSBC, Ocwen and Cenlar FSB.

Dobson claims PNC and ACIS entered into an exclusive force-placed insurance agreement, wherein PNC Bank would charge borrowers inflated insurance premiums that would later earn PNC a commission from ASIC. This alleged force-placed insurance agreement allowed both PNC and Assurant’s subsidiary to profit, while Dobson and other Class Members suffer.

According to the PNC force-placed insurance class action lawsuit:

“The notices and statements lull borrowers into believing that no fraudulent scheme is occurring and that PNC and ASIC and/or their affiliates are simply exercising PNC’s rights under borrowers’ mortgage loan agreements. By lulling Plaintiff and the Class into a false sense of security, the notices and statements make it less likely that borrowers will object to the improper charges, complain to the authorities, or bring lawsuits.”

Dobson claims PNC and ASIC committed RICO violations by employing business practices that overcharge homeowners for insurance, thereby defrauding these mortgage borrowing consumers. The plaintiff further alleges that he and similarly situated Class Members were scared into paying this allegedly illegal force-placed insurance because they were afraid of losing their homes.

Dobson is seekign financial restitution for himself and for a Class consisting of:

“All persons who have or had a mortgage loan or line of credit owned, originated or serviced by PNC and/or its affiliates secured by property located in United States and, in connection therewith, were charged for ‘force-placed’ flood insurance on the secured property within the applicable statute of limitations.”

The plaintiff has also petitioned the court for an injunction against PNC and ACIS to force the companies to change their practices and reverse the unlawful and unfair charges placed on unsuspecting borrowers.

Michael Dobson is represented by Stanley M. Stein of Stanley M. Stein PC and Stephen J. Fearon Jr. of Squitieri & Fearon LLP.

The PNC Bank Force-Placed Insurance Class Action Lawsuit is Dobson v. PNC BANK NA, et al., Case No. 2:15-cv-00582, in the U.S. District Court for the Western District of Pennsylvania.