Wells Fargo will spend $80 million to address improper charges of more than a half million of the bank’s auto-loan customers between 2012 and 2016, according to a press release from the bank. Of the $80 million, $64 million will be in cash repayments while the remainder will be account adjustments. The problems stem from the banks use of collateral protection insurance policies (CPI), which enrolled many customers in unnecessary insurance plans with the bank and its partners. The charges led to financial hardship for many of the wrongly enrolled customers.
According to The New York Times, an internal report from 2016 showed that the excessive insurance charges affected more than 800,000 customers, resulting in 274,000 account delinquencies and 25,000 vehicle repossessions. Natalie M. Brown, a vice president in the bank’s consumer-lending communications department, says that the total number of affected customers cited by The Times
is from a preliminary report that overestimated the share of policies that were ultimately deemed inappropriate. The final tally, she says, is closer to 570,000. Another spokesperson said that the number of repossessions was closer to 20,000. The bank declined to provide the report to The Atlantic.