Wells Fargo & Co may be in more trouble after a new lawsuit accuses the banking giant of racketeering violations and fraud, according to The New York Times.
The class action lawsuit was filed Sunday and comes after the bank admitted to charging several hundred thousand borrowers for auto insurance they did not need, according to the Times.
The case comes in the wake of Wells Fargo’s scandal of employees creating fake accounts in order to meet sales goals. The company’s shares fell 2.6% after the Times reported the news on Friday, according to CNBC. Piper Jaffray Analyst Kevin Barker noted on the network how the issue was identified in July of last year but was not disclosed to investors and the public until last week.
A $598 problem leads to $80 million payment from Wells Fargo
A 34-year-old marketing consultant from Indianapolis, Paul Hancock, noticed the bank wrongly charged him for insurance. Wells Fargo charged him $598 after he repeatedly told the bank he had coverage from Allstate, and enforced a late fee once the payment was not made. Hancock leads the lawsuit that brought the issue to light, and many more customers could follow.
The scandal has cost Wells Fargo $80 million in damages so far. Wells Fargo said the amount will be refunded to an estimated 570,000 customers who were wrongly charged for auto insurance from 2012 to 2017, including about 20,000 whose vehicles were repossessed. Many of the plaintiffs feel as though the refunds are not enough to make up for the bank’s bad practices. A lawyer for the plaintiffs, Roland Tellis, said in an interview, “Wells Fargo has long lost the right to decide what is best for its customers.”
Wells Fargo hasn’t had the best year. The bank has been called out for putting fault on customers and forcing them to pay mortgage delays. A fine was also levied on the company for illegally repossessing cars of actively deployed military members. The bank also lost its Better Bureau Business accreditation.