Report: Wells Fargo will pay millions in refunds for pet insurance, other add-on products
Wells Fargo & Co. will refund tens of millions of dollars to customers who paid for identity-theft protection, pet insurance and other add-on services offered by the bank, the Wall Street Journal reported Thursday.
The San Francisco bank has been looking into problems with add-on products since the summer of 2015, when regulators slapped Wells Fargo with a consent order saying some customers had paid for identity theft and credit-monitoring services they never received.
In a May regulatory filing, the bank said it was still reviewing the issues and had started providing refunds.
But Thursday’s Wall Street Journal story, which cited unnamed sources familiar with the matter, reported that problems extended beyond the add-on products identified by regulators in 2015 and include pet insurance and legal services. Those offerings, which also included credit monitoring and home warranties, were added on to credit card accounts, home mortgages and other financial products.
Hundreds of thousands of customers may receive refunds, according to the newspaper’s report, which also said some customers may not have understood what they were paying for.
Wells Fargo spokeswoman Catherine Pulley said Thursday that the bank continues to look into the matter, but did not address how much has been paid in refunds or to how many customers.
“We are reviewing add-on products sold to consumers by the bank or its service providers and if issues are found during this review, we will make things right with customers in the form of refunds or remediation. We are working with our regulators on the ongoing review,” she said.
Wells Fargo stopped selling add-on products to consumers last year. Add-ons, particularly credit- and identity-theft protection services, were once popular offerings, but some banks stopped offering them after regulators found that customers didn’t know what they were getting or, in some cases, were paying for services they never received.
In 2015, Bank of America and Citigroup each paid more than $700 million in refunds and penalties related to add-ons in regulatory settlements with the Consumer Financial Protection Bureau.
Thursday’s report is just the latest bad headline for Wells Fargo, which over the last two years has admitted that it created millions of bank accounts without customers’ authorization, charged improper fees on mortgage borrowers and forced thousands of auto-loan customers to pay for insurance policies they did not need.
Those practices led to a $185-million settlement with bank regulators in 2016, a $1-billion fine from the Federal Reserve this year and an order from the Fed for the bank to stop growing until it can show regulators it has improved its internal oversight and risk-management abilities. It’s not clear whether the bank will have to complete its review and remediation of add-on products as a condition of having the Fed’s growth cap lifted.
The bank’s creation of unauthorized accounts was first disclosed in a 2013 investigation by the Los Angeles Times.
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UPDATES:
11:25 a.m.: This article was updated with additional details about the bank’s add-on services and settlements reached by other large banks for similar problems.
This article was originally published at 10:25 a.m.
