Wells Fargo Faces New Accusations of Fraud
Wells Fargo is facing new charges that it fraudulently sold products to its customers without their knowledge. This time the product involved are life insurance policies.
Two insurance companies, Prudential and Assurant, suspended selling products through Wells Fargo after three former Prudential employees filed whistleblower lawsuits having uncovered evidence that Wells Fargo was selling low-cost Prudential life insurance policies to their customers without their consent.
According to the New York Times, one of the affected customers is a man from Arizona who found out about the insurance when he was contacted by a collections agency because of unpaid premiums on a “MyTerm” Prudential life insurance policy. When he contacted Prudential to get the policy cancelled, Prudential refused. The customer is now seeking a class action suit against Prudential.
The New York Times article points out that the insurance products Wells Fargo for Renters had the same characteristics as the life insurance plans; both were
"fairly inexpensive products that could be bought in a few minutes, after the applicant filled out a brief online questionnaire."
Most of the life insurance plans were targeted toward Hispanic customers in Southern California, Texas, Arizona and Southern Florida areas according to a New York Times article published December 9, 2016. About 70% were dropped after only one or two months, while in some cases the premiums were deducted from customer's account.
Some of these policies were opened, closed, and then reopened, suggesting bankers were trying to "buoy sales numbers." In some cases, just to pad their numbers, some bankers in a single Wells Fargo branch would buy cheap life policies for their friends and relatives, pay the first month's premium and then cancel them, which is a violation of regulatory rules and Wells Fargo's own policies. The reason why some Wells Fargo employees allegedly engaged in these types of sales practices is related to the pressure to make sales quotas.
Prudential has stopped the sale of their “MyTerm” life insurance policies Wells Fargo was selling and set up a free information hotline for people who believe they’ve fallen victim to Wells Fargo’s conduct. Joel Winston, an attorney specializing in privacy and consumer advocacy law is also a former deputy attorney general for the State of New Jersey and has been following this case. When asked about Prudential’s informational phone number he said, “The toll-free number set up by Prudential does not provide adequate information for consumers to verify if their personal information has been compromised in this fraudulent scheme.” Winston added, “There’s no option for information in Spanish, which could be problematic for Hispanic consumers who were targeted by Wells Fargo.”
When we called the Prudential number we spoke to a person who only spoke English. When we asked if there was an option to receive the information we sought in Spanish, the Prudential representative on the line said there was no Spanish option available.
It should also be pointed out that while the story about Wells Fargo selling fraudulent Prudential insurance products to customers without their permission has been reported in several English language news outlets, such as The New York Times, CNN, and others, Insedia.com has not found reports of the story online in Spanish. Not in the websites for the major Hispanic TV networks, Univision and Telemundo, nor in any major Spanish language newspaper in the United States. Prudential has put out a press release in Spanish, translated from an English language press release claiming their customers have not complained about fraudulent activity with their insurance policies. This has more or less shut out access to information about this case to consumers who were the primary targets of Wells Fargo’s alleged chicanery.
Wells Fargo, of course, is no stranger to these kinds of accusations. In September, it was found to be involved in a scandal dating back to 2011 where employees were enrolling customers in credit card accounts they didn't authorize, while paying out sales commissions for these fraudulent account openings. Wells Fargo was fined $185 million including $100 million by the Consumer Financial Protection Bureau, the largest such fine the government agency had issued to date. Also as a result of the scandal and after appearing before Congress twice to give testimony about the illegal activities in regards to the fraudulent credit card account issue, Wells Fargo CEO John Stumpf resigned.
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