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Wells Fargo Hit With Auto-Loan Lawsuit While Political Backlash Grows

Less than a month after Wells Fargo & Co. (WFC) CEO Timothy Sloan settled one class-action lawsuit accusing the bank of exploiting its customers, the company is grappling with another.

This time, however, it's over unnecessary insurance policies tacked on to auto loans rather than bogus credit card and savings accounts.

A borrower who financed a February 2016 automobile purchase through the lender filed a lawsuit in U.S. District Court in San Francisco on Sunday, July 30, claiming he was charged for insurance he didn't need and seeking class-action status to represent all U.S. borrowers in the same situation, as well as those in the states of California and Indiana, specifically.

The suit, involving a vehicle purchased at a Ford dealership in Indiana, was initiated less than three days after Wells Fargo said it would return $80 million to about half a million vehicle-loan customers enrolled in so-called collateral protection policies even though the borrowers already met the lender's insurance requirements. Collateral policies protect lenders from damage to cars used to secure loans if the driver lacks sufficient coverage.

The discovery compounds the damage to Wells Fargo's image from an earlier scandal involving the creation of as many as 2 million unauthorized accounts by employees struggling to meet aggressive sales quotas. The accounts, made public in a $185 million settlement with regulators, spurred criminal investigations, fiery Congressional hearings and the abrupt retirement of then-Chairman and CEO John Stumpf.

Sloan, his successor, had just settled a class-action lawsuit over that matter for $142 million and was making progress in rehabilitating the Wells brand when the auto-loan issues were disclosed.

"We are very sorry for the inconvenience this caused impacted...


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