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THE GOOD FIGHT: Paul John, executive director of the Georgia Independent Automobile Dealers Association, discusses how the association fought against state legislation that would have raised the taxes on used-car purchases.

Wells Fargo Pays For Adding Collateral Protection Insurance

Wells Fargo Pays For Adding Collateral Protection Insurance Featured

Wells Fargo & Co. announced a plan to pay back auto loan customers of Wells Fargo Dealer Services who may have been financially harmed due to issues related to auto collateral protection insurance (CPI) policies.
Wells Fargo reviewed policies placed between 2012 and 2017 and identified approximately 570,000 customers who may have been impacted and will receive refunds and other payments as compensation. In total, approximately $64 million will be sent to customers in the coming months, along with $16 million of account adjustments, for a total of approximately $80 million in remediation.
Starting in August, Wells Fargo will reach out to impacted customers with letters and refund checks.
Customers’ auto loan contracts require them to maintain comprehensive and collision physical damage insurance on behalf of the lender throughout the term of the loan. As permitted under those contracts, Wells Fargo would purchase CPI from a vendor on the customer’s behalf if there was no evidence – either from the customer or the insurance company – that the customer already had the required insurance.
CPI insurance protects against loss or damage to a vehicle serving as collateral to secure a loan and helps ensure that borrowers can pay for damages to a vehicle.
In response to customer concerns, in July 2016 Wells Fargo initiated a review of the CPI program and related third-party vendor practices. Based on the initial findings, the company discontinued its CPI program in September 2016.
Since then, the company has gone through a comprehensive review using independent consultants to ensure the remediation plan it develops addresses customers’ situations in a thorough and thoughtful way.
Wells Fargo’s review determined that certain external vendor processes and internal controls were inadequate. As a result, customers may have been charged premiums for CPI even if they were paying for their own vehicle insurance, as required, and in some cases the CPI premiums may have contributed to a default that led to the vehicle’s repossession.
Wells Fargo already has been providing CPI-related refunds to some customers and, beginning in August, will send letters and refund checks to customers who are due additional payments. The process is expected to be completed by the end of the year.

Last modified on Sunday, 30 July 2017 15:22
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