In lieu of the class action suit filed against them for an alleged car insurance scam, Wells Fargo, the fourth-biggest financial service in the United States, has agreed to pay $385,000,000 in cash to those who were tricked. The customers said, in their defense, that they did not give consent or their knowledge when they were automatically signed into car insurance, after applying for a car loan, in the said financial service provider. This recent alleged insurance scam is one of the many scandals hurting the name of Wells Fargo. Since 2016, there have already been allegations of fraud with the same company, and as a result of this, the company is facing several charges on the court.
Earlier this year, the company said, they could be spending at least $2.7 billion alone to resolve legal disputes, one of which is the recent car insurance scam being hurled against them. By the end of December, the company is expected to lose at least $500 million from its total yearly collections because of court expenses. During the litigation, the company was charged with milking money from their customer in what is described as ‘basking’ to be auto insurance the customers did not sign up for.
This automatic registration of their customer’s name to car insurance, they are not aware of pushed at least 250,000 active paying customers to the car delinquency, which resulted in their vehicles being repossessed by the car company itself. Just this Thursday, a proposed settlement was filed in a federal court in Santa Ana, California regarding the case. This settlement has to be approved by a judge before it becomes binding to both parties. A report likewise said that National General, a car insurance writer, is expected to add up a $7.5 million dollar to the existing settlement agreement. This is based on the settlement filed by Wells Fargo.