Banking

Wells Fargo says it now expects to pay customers $130M over auto insurance product

A Wells Fargo sign is displayed at a branch in New York.
A Wells Fargo sign is displayed at a branch in New York. AP

Wells Fargo said in a securities filing Friday that it expects to shell out $130 million to customers affected by a now-discontinued auto insurance product, about $50 million more than originally anticipated.

The San Francisco-based bank said it estimates that it will provide about $100 million in cash remediation and $30 million in account adjustments under the plan. In July, Wells said it expected to pay out $64 million of cash remediation, along with $16 million in account adjustments.

The revelations about the auto insurance program followed a sales practices scandal in Well’s community bank that erupted in September 2016, leading to a $185 million settlement, congressional hearings and a CEO change.

In July, the bank, which has a major employee hub in Charlotte, admitted as many as 570,000 customers may have been charged premiums for auto insurance they did not need, a practice that in some cases may have also contributed to vehicle repossessions.

Starting in August, Wells began sending refund checks to affected customers with policies placed between Jan. 1, 2012, and Sept. 30, 2016, when the practice was discontinued by the company, according to the filing. The time period in which customers may be eligible to receive remediation has since been extended back to October 15, 2005, the filing said.

“This is an ongoing remediation, and it may continue to evolve as we work to make things right for our customers, including working with our regulators on our remediation plan,” Wells Fargo spokeswoman Catherine Pulley said.

Multiple class-action lawsuits against the company over the auto insurance have been consolidated in U.S. District Court for the Central District of California, according to the filing. A former employee has also alleged retaliation by the company for raising concerns about auto lending practices.

Rick Rothacker: 704-358-5170, @rickrothacker

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