Wells Fargo will pay $300 million to settle a lawsuit that claims it improperly charged customers for unnecessary auto collision protection insurance and hid the practice from investors.
The settlement was announced Tuesday by the law firm that sued the bank after a New York Times investigation revealed some 274,000 customers were in default and nearly 25,000 vehicles were improperly repossessed.
Wells Fargo stopped charging customers for insurance but did not tell investors, according to a statement issued by Robbins Geller Rudman & Dowd.
The law firm filed a securities fraud class action lawsuit alleging that the bank’s shares were trading at artificially inflated prices.
Wells Fargo disclosed in a regulatory filing that it had been aware of the issue since 2016, a year before the 2017 New York Times story, according to the statement.
Investor lawyers are now looking at court approval of the deal.
“When companies hide widespread unfair or abusive business practices that harm their customers, investors are often hurt as well,” Scott H. Saham, an attorney representing the class, said in the statement.
Wells Fargo representatives did not immediately respond to emails seeking comment.
The case is Purple Mountain Trust v. Wells Fargo & Company, 3:18-cv-03948, US District Court for the Northern District of California (San Francisco).
