Who Snatched My Car? Wells Fargo Did

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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.