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Wells Fargo accused of more improprieties against its customers

There is another major scandal at Wells Fargo, and the banking giant could be facing trouble with insurance regulators in at least five states. According to an internal report prepared for Wells Fargo executives, the bank foisted unwanted and often unnecessary car insurance onto as many as 800,000 unsuspecting customers.

According to the report, which was prepared by a consulting firm and obtained by the New York Times, Wells Fargo engaged in the relatively rare practice of requiring borrowers to obtain auto insurance when they took out car loans, even though auto insurance is already required for drivers nationwide. In theory, the borrower could meet the requirement by purchasing auto insurance on their own.

In reality, many borrowers who had their own insurance were charged by Wells Fargo anyway. Moreover, the policies were more expensive than market rates -- and in many cases, Wells Fargo took a cut of the premiums.

The unexpected extra expense of the unnecessary insurance is estimated to have pushed some 274,000 customers into delinquency and caused nearly 25,000 wrongful repossessions, according to the consultants. Among those were active duty military service members. In a statement, a Wells Fargo spokesperson made trifling objections to the exact numbers.

According to the New York Times, an example customer might have agreed to a car loan with a payment of $275 per month and agreed to put that on auto-pay. The actual charge, however, would be $325 after the cost of insurance was added. Many customers noticed the issue and complained, but Wells Fargo didn't always refund their money or cancel the unnecessary insurance policies.

Many borrowers sustained serious financial damage beyond the hidden cost of the insurance itself, including late fees, insufficient funds charges, repossession costs, and hits to their credit, which cost consumers in a number of other ways. The report estimated the total damage to customers at $73 million.

Moreover, Wells Fargo often failed to disclose the insurance policies to customers. This violates insurance law in five states -- Arkansas, Michigan, Mississippi, Tennessee and Washington -- and appears to have affected around 100,000 customers. Wells Fargo quibbled about that number, as well.

The practice of requiring the expensive insurance began in 2006, according to the Times, and continued at least through July 2016.

Wells Fargo Dealer Services ran into trouble last fall after it was found to have illegally repossessed vehicles owned by active-duty military service members. It agreed to pay $4 million in a settlement, and several top executives left the division. Wells Fargo has also faced a number of other scandals involving wrongdoing against its customers, which are detailed in the New York Times piece.

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