Wells auto borrowers want bank compelled to help repair credit reports

WASHINGTON (Reuters) – Borrowers unwittingly charged for auto insurance when they took out car loans from Wells Fargo & Co asked a U.S. court on Friday to force the bank to help them repair their credit scores.

As part of the class action in the U.S. District Court for the Southern District of New York, some of the 800,000 people who were charged unknowingly for unnecessary insurance filed a motion to have National General Insurance Company, Wells and the bank’s dealer services “investigate and correct any and all inaccurate information that Defendants or their agents reported to Equifax, Experian, TransUnion” and other credit agencies.

That would keep the borrowers from enduring “imminent, irreparable harm” because Wells had reported monthly payments made higher due from the erroneous auto insurance charges, purported delinquencies on the insurance, and other shortfalls.

All U.S. lenders use credit reports to determine the amount of risk a potential borrower poses, and from there set interest rates in accordance with the likelihood the borrower will default or turn the person down outright. Low credit scores can cost borrowers thousands more in interest every year on mortgages, car loans, insurance, rent, and credit cards.

Last week, Wells Fargo announced it would begin a remediation program this month going through the end of the year for 570,000 of the borrowers given improper car insurance that includes “working with credit bureaus to correct customers’ credit records, if applicable,” as well as refunds.

Last Friday news broke Wells had enrolled 800,000 borrowers for collision insurance from National General without their knowledge or consent. Some customers repeatedly notified the bank they already had coverage, often cheaper, through another company, but still were charged the monthly premium.

The bank has already had to go to court over its sales practices in the last year, after it was revealed that it had signed up millions of people for phony or unnecessary accounts and products, often without them knowing.

The litigants requesting a preliminary injunction say National General received millions of dollars fraudulently for commissions on the policies, while Wells received kickbacks from the insurer, higher interest costs, and collecting additional levies such as fees associated repossessing cars.

A Wells spokeswoman declined to comment on Friday’s motion. Under court rules, the bank has 14 days to respond. The borrowers filing the motion requested oral arguments.