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Who Snatched My Car? Wells Fargo Did

Aug 2, 2017
Originally published on August 2, 2017 9:12 pm

Wells Fargo is back in the spotlight for another scandal. This time, for signing up 490,000 auto-loan customers for insurance they didn't need.

This comes less than a year after the bank generated a massive public outcry for opening millions of unwanted accounts for customers.

Customers who already had car insurance say they had no idea they were being charged for this insurance from Wells Fargo. And the bank acknowledges that tens of thousands of people wound up in default, which affected people's credit scores, and thousands had their cars repossessed.

One of them was Michael Feifer.

One morning in February, he was heading off to his job in Maryland at a company that builds guitars. He walked to the spot where he'd parked his car, but it wasn't there.

"I called the police," he says. "I was livid. I thought somebody stole my car."

Somebody had improperly made off with Feifer's car. But it wasn't a car thief. It was Wells Fargo bank. The police informed him of this when he called them. "That's when I found out it was repossessed," he says.

Feifer says he had no idea why the bank would repo his car. He says his payments were automatically taken out of his checking account.

"I've never missed a payment," he says. "My insurance was current."

So he called Wells Fargo and found out the bank had put another insurance policy on his car. Lenders do this when a borrower doesn't have insurance. Wells Fargo calls it collateral protection insurance, or CPI.

And there's nothing wrong with that, but Wells Fargo imposed this insurance on nearly a half-million people who already had insurance. The bank outlined the scope of the problems and its efforts to resolve them in a statement.

Right after Feifer's car got repo'd, Wells Fargo told him he was marked as delinquent for not paying this insurance — which he didn't want or need or even know about. "They said, well, you owe $1,500," he says.

Wells Fargo is among NPR's financial supporters.

Wells Fargo has been trying to repair its image in the wake of a massive consumer banking scandal. Part of that effort has been to improve the way the bank works with customers when they run into problems or have complaints. Feifer's story suggests the bank still has a ways to go on that front.

"I showed up at that bank with my bank statements showing all the payments I made for my vehicle and my proof of insurance showing that I've never had a lapse in my insurance," he says. "The people at the bank were like, 'Well, you shouldn't owe anything because it's not your fault.' They were just as confused as I was."

Feifer says the branch employees were trying to be helpful. They called up the Wells Fargo department for him that deals with car repossessions to find out what was going on. They kept getting put on hold.

"We were probably on hold for a total of 2 1/2 hours while I was in there," Feifer says. "I literally spent the whole day" at the branch. He says the employees were getting frustrated too. "They're like, 'This is ridiculous. You shouldn't be on hold for this long.' "

What Feifer didn't know was that Wells Fargo had already been doing an internal investigation into complaints from lots of customers for the same insurance mix-up.

Feifer was eventually told to call back several days later. Then he was told there was no record of his prior calls from the branch. He said the person he spoke to on the phone wouldn't let him talk to a supervisor. "She was rude to me, talking over me. I felt like she wasn't willing to hear anything I had to say," Feifer says. He says the Wells Fargo representative just kept telling him he had to pay the money.

Meanwhile, Feifer was told that the clock was ticking and his car would be auctioned off two weeks from the day it was repossessed. So, after much haggling with the bank, he paid about $600 to get his car back.

Feifer said he figured this was just some freak mistake. But when he heard this insurance issue affected hundreds of thousands of customers, "I was blown away," he says. "I wasn't alone in it and I felt like they're preying on everybody, taking people's money. I felt like they're crooks."

Wells Fargo says this was not a case of trying to improperly profit at customers' expense, but rather just an embarrassing breakdown in processes and internal controls.

"We take full responsibility for our failure to appropriately manage the CPI program and are extremely sorry for any harm this caused our customers, who expect and deserve better from us," Franklin Codel, head of Wells Fargo Consumer Lending, said in a statement. "Upon our discovery, we acted swiftly to discontinue the program and immediately develop a plan to make impacted customers whole."

Consumer advocates, though, say this latest debacle shows that the bank still has serious and systemic problems.

"What we are seeing here is a colossal failure of management on behalf of Wells Fargo," says Ira Rheingold, executive director of the National Association of Consumer Advocates.

He says that once again vast numbers of customers are getting products they don't want pushed on them without their knowledge. And on top of that, he says, when customers complained, it took too long for Wells Fargo management to figure out the problem and fix it. "They are not investing the necessary resources for consumers who have problems to service those customers who they talk about in glowing terms," Rheingold says.

Going forward, Wells Fargo is setting aside about $80 million for remediation and says customers will start getting letters and refund checks later this month. Class action lawsuits are being filed on behalf of customers. The bank has no comment on those.

But a spokesperson says Wells Fargo is very sorry for Feifer's experience and that he will be part of the remediation effort.

Copyright 2017 NPR. To see more, visit http://www.npr.org/.

ARI SHAPIRO, HOST:

Another scandal at Wells Fargo has been uncovered. This time, the bank signed up nearly half a million customers with auto loans for insurance that they didn't need. They didn't need it because they already had car insurance. Customers say they had no idea this was happening and that the bank expected them to pay for this extra policy. Wells Fargo acknowledges that tens of thousands of people wound up in default, which affected credit scores. And thousands had their cars repossessed. NPR's Chris Arnold reports.

CHRIS ARNOLD, BYLINE: Back in February, Michael Feifer was heading off to his job in Maryland at a company that builds guitars, and he walked to the spot where he'd parked his car the night before. But it wasn't there.

MICHAEL FEIFER: I called the police. I was livid. I thought somebody stole my car.

ARNOLD: Somebody had improperly made off with Feifer's car, but it wasn't car thieves. It was Wells Fargo Bank, which the police told Feifer.

FEIFER: And that's when I found out it was repossessed.

ARNOLD: Which he says didn't seem to make any sense.

FEIFER: I was confused because my payments were automatically taken out. I've never missed a payment. My insurance is current.

ARNOLD: So he called Wells Fargo, which we should note is a sponsor of NPR, and he says he was told that the bank had put another insurance policy on his car. And that got him marked as delinquent for not paying that insurance, which he didn't want or need or even know about.

FEIFER: They said, well, you owe $1,500.

ARNOLD: So Feifer got all his documents together, and he made an appointment at his local Wells Fargo bank branch.

FEIFER: I showed up at that bank with my bank statement showing all the payments I made for my vehicle and my proof of insurance showing that I've never had a lapse in my insurance.

ARNOLD: And so they were just scratching their heads basically, like, why did we repossess this car?

FEIFER: Exactly. The people at the bank were like, well, you shouldn't owe anything because it's not your fault. They were just as confused as I was.

ARNOLD: Feifer says the employees at the branch were trying to be helpful. They called up the Wells Fargo department for him that deals with car repossessions to try to find out what was going on. They put on the speaker phone. But that didn't work out so well because all of them kept getting put on hold.

FEIFER: We were probably on hold for a total of two and a half hours while I was in there.

ARNOLD: Wow.

FEIFER: I literally spent the whole day at the Wells Fargo branch that I was at. The employees at the Wells Fargo there were getting frustrated, too. They were like, this is ridiculous. You shouldn't be on hold for this long.

ARNOLD: What Feifer didn't know was that Wells Fargo had already been doing an internal investigation into complaints from lots and lots of customers for this same problem. But that didn't seem to help Feifer that day. He was eventually told to call back later in the week. When he did, the woman on the phone said there was no record of his prior calls from the branch.

FEIFER: And she was rude to me. She was talking over me. I felt like she wasn't willing to hear what I had to say. The only thing she wanted to hear was, I'm going to pay this money right now.

ARNOLD: Meanwhile, Feifer was told that his car was going to be auctioned off two weeks from the day it was repossessed. So in the end, after much haggling with the bank, he paid about $600 to get his car back. Feifer figured this was just some freak thing, but when he heard that this insurance debacle affected half a million customers...

FEIFER: I was blown away. I wasn't alone in it. And I felt like they're preying on everybody, taking people's money. I felt like they're crooks.

ARNOLD: Wells Fargo says that this was not a case of trying to improperly profit at customer's expense but rather just an embarrassing breakdown in processes and internal controls. In a statement, the bank acknowledges that 490,000 customers were signed up for insurance that they did not need. The bank is setting aside $80 million to reimburse customers. Class action lawsuits are being filed. The bank has no comment on those. But a spokesperson says Wells Fargo is very sorry for Michael Feifer's experience and that he will be included in the remediation effort. Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.