As a blogger, I have to admit that my favorite corporate criminal, Wells Fargo, is just a continual font for posts. Today's news is that the bank decided not to refund the portion of what is called GAP, or guaranteed asset protection, insurance due back to the customer when the loan was paid off or, worse, when the car was repossessed.
This Wells Fargo fraud is an adjunct of their previously reported scam of forcing people to buy collision insurance when they took out a car loan with the bank. Customers were signed up for this insurance without notification from Wells Fargo and even if the customers already had purchased that insurance on their own. That particular rip-off affected over 800,000 customers and created 275,000 delinquent payments as well as 25,000 repossessions because customers were not aware of the additional insurance charge on their loan. In addition, the bank prioritized the insurance payment, thereby extending the principal paydowns on the loan and increasing the customers' total interest costs and, unsurprisingly, increasing Wells Fargo profits.
GAP insurance is not required for car owners but it pushed heavily by auto dealers and lenders for the very simple reason the car loses so much value when it is driven off the lot. The insurance protects the lender from that loss of value and is usually included in the total cost of the loan. However, if the loan is paid off or the car is repossessed, the unused portion of the GAP insurance should be credited back to the customer. Wells Fargo did not do this, essentially ripping off tens of thousands of its auto loan customers. For those whose cars were repossessed, the failure to refund this insurance actually hurt their credit score even more as it appeared they owed more then they really did. And, as in previous Wells Fargo scandals, the company can not tell us when this scam began. In prior cases, the fraud had been going on for a decade or more.
When it comes to Wells Fargo, I keep on repeating myself so I will just quote from my prior post: "Basically, it now appears that Wells Fargo has been engaged in ongoing illegal activities since the turn of the century. You would think that just maybe one person, one executive, would be going to jail or at least being prosecuted for this record of criminality. Instead, the bank just continues to pay slap-on-the-wrist fines and continues on with business as usual. As I've said until my face turns blue, until a senior executive does some real jail time, business will continue to feel that illegal behavior will actually be rewarded because the profits will outweigh the fine." Sadly, this case will not end any differently than all the others that came before it and all the others yet to come, and they will come, because the bank never, ever incurs a significant penalty.