Wells Fargo & Co. (NYSE: WFC) is in hot waters again as the company faces charges of racketeering violations and fraud after the bank admitted to charging several hundred thousand borrowers for auto insurance that they did not ask for or need.
The proposed class action filed on Sunday in San Francisco federal court puts the bank in yet another scandal situation. It follows the scandal in which the third-largest U.S. bank has said employees created as many as 2.1 million unauthorized customer accounts to meet sales goals, according to Reuters.
This lawsuit is being led by Paul Hancock. (Hancock v Wells Fargo & Co et al, U.S. District Court, Northern District of California, No. 17-04324)
He said that Wells Fargo charged him $598 for insurance, even though he told the bank numerous times he had coverage from Allstate, and imposed a late fee after the unnecessary policy took effect.
Wells Fargo stated last week that it would refund about $80 million to an roughly 570,000 customers who were wrongly charged for auto insurance from 2012 to 2017, and of those 570,000, approximately 20,000 had their vehicles repossessed.
Wells Fargo shortly released the statement stating its refund after the New York Times had written an article about the wrongful charges to customers.
Wells Fargo claimed it stopped the charges last year after customers expressed “concerns.” But according to the lawsuit, it is stating that the refunds are not enough.
"Wells Fargo has long lost the right to decide what is best for its customers," Roland Tellis, a lawyer for the plaintiffs, said in an interview.
"Refunds don't address the fraud or inflated premiums, the delinquency charges, and the late fees," he also stated. "It will be up to a jury or court to decide the appropriate remedy."
Wells Fargo spokeswoman, Catherine Pulley, did not comment on the lawsuit, but stated in an email, "We are very sorry for the inconvenience this caused impacted customers and we are in the process of notifying them and making things right."
The class action lawsuit seeks unspecified damages, which would be tripled for people who fell into the scandal by Wells Fargo.
"If refunding premiums was just the start, this could be a nine-figure case," Tellis said.
Wells Fargo's accounts scandal resulted in $185 million of regulatory penalties and a $142 million settlement of private litigation, and cost former Chief Executive John Stumpf his job.