Wells Fargo's Illegal Activity Never Seems To End

My favorite criminal financial services firm just can’t seem to stop breaking the law. The NY Times reported today that Wells Fargo forced over 800,000 customers to buy unnecessary and unwanted auto insurance and apparently some customers are still paying for that insurance to this day.

In the mortgage industry, it is a common practice to have what is called “lender-placed insurance” so that there is some assurance the loan is backed to some degree by the customer. Wells Fargo decided to extend this practice to its auto loans and shared in the profits generated by the insurance company the bank chose to use for this insurance. This apparently mandatory collision damage insurance forced nearly 275,000 loan customers into delinquency and caused around 25,000 vehicle repossessions. Some of those ripped off in this particular Wells Fargo scheme were active military service members. Worse, it appears that this scheme violated the disclosure agreements in at least five states, Arkansas, Michigan, Mississippi, Tennessee and Washington. Customers who tried to show they already had their own collision insurance and tried to cancel the one “provided” by Wells Fargo continued to be harassed by Wells’ employees for payment. In addition, Wells prioritized the interest payment and the insurance payment before applying it to the principal, meaning that this unnecessary insurance added to the total interest payment that the bank would receive.

All this is on top of the 15 year scam that Wells Fargo ran that created thousands of bogus accounts and credit cards without the proper customer authorization in order to generate increased fees and revenue. That was followed by the revelation that the bank unilaterally changed the terms of mortgage agreements of customers in bankruptcy, again without proper customer authorization or notification, in order to extend the loan and create more interest income for the bank. According to the bank’s internal report, this insurance scheme only ran from 2012 to 2016 but it is worth noting Wells Fargo began the lender-placed insurance practice back in 2006, raising the real possibility that the abuses occurred far earlier than the bank currently admits.

Basically, it now appears that Wells Fargo has been engaged in ongoing illegal activities since the turn of the century. You would think that just maybe one person, one executive, would be going to jail or at least being prosecuted for this record of criminality. Instead, the bank just continues to pay slap-on-the-wrist fines and continues on with business as usual. As I’ve said until my face turns blue, until a senior executive does some real jail time, business will continue to feel that illegal behavior will actually be rewarded because the profits will outweigh the fine.