Wells Fargo Pays $393.5 Million to Resolve Forced Auto Insurance Scheme
Won by CaseyGerry.
In multidistrict litigation before Judge Andrew J. Guilford, CaseyGerry served as class counsel in a $393.5 million settlement resolving allegations that Wells Fargo secretly loaded unnecessary collateral protection insurance onto auto loan accounts, pushing hundreds of thousands of borrowers into delinquency and causing roughly 27,000 wrongful vehicle repossessions.
What happened
From at least 2005 through 2016, Wells Fargo Bank and its insurance partner National General Insurance Company ran a scheme the plaintiffs called straightforward: the bank quietly placed collateral protection insurance, known as CPI, onto auto loan accounts belonging to customers who already carried their own car insurance. The CPI policies were, by design, duplicative and overpriced. Wells Fargo collected fees; National General collected premiums; borrowers were left paying for coverage they did not need and had never agreed to buy.
The consequences for ordinary borrowers were severe. The added insurance charges drove approximately 274,000 Wells Fargo customers into loan delinquency. About 27,000 of those customers had their vehicles repossessed, in many cases because the manufactured shortfall, not any genuine inability to pay, triggered the default. For a family that depended on a car to get to work, the repossession could unravel everything else.
Consolidated as a multidistrict proceeding in the Central District of California, the litigation attracted several major plaintiffs' firms. CaseyGerry's David S. Casey Jr. and Gayle M. Blatt served as class counsel alongside co-counsel from Baron and Budd and Robins Kaplan, among others. The firms alleged violations of consumer protection statutes and pressed claims against both Wells Fargo and National General. The litigation survived partial dismissal in 2018 and proceeded toward trial, at which point settlement negotiations accelerated.
In June 2019 the parties moved for preliminary settlement approval. Judge Guilford granted it in August 2019, conditioning approval on notice to the class. The settlement fund totaled at least $393.5 million, with Wells Fargo contributing $385 million and National General contributing $7.5 million. The court reserved up to $36 million for attorney fees and up to $500,000 for expenses. On November 20, 2019, the court granted final approval.
The class covered Wells Fargo Dealer Services customers who had a CPI policy placed on their account between October 15, 2005 and September 30, 2016, and Wells Fargo Auto Finance customers with policies effective between February 2, 2006 and September 1, 2011, together representing hundreds of thousands of claimants across the country.
Sources
This account is drawn from contemporaneous public reporting and the court record.
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