Wells Fargo may have unlawfully charged consumer lenders for collateral protection insurance.

Investigation and pending class action lawsuit against Wells Fargo. Wells Fargo, through its subsidiaries, engaged in the practice of obtaining and charging borrowers for unnecessary and unauthorized collateral protection insurance.

The class action lawsuit alleges that Wells Fargo Financial Illinois, Wells Fargo Auto Finance, Inc,, and Wells Fargo Financial Acceptance Illinois, Inc. violated the Illinois Collateral Protection Act, the Illinois Consumer Installment Loan Act, and the Illinois Consumer Fraud Act. Collateral protection insurance is insurance coverage purchased unilaterally by a creditor for protection against loss of or damage to property serving as collateral for a loan. Under Illinois law, lenders can only purchase this insurance and bill borrowers for it under very limited circumstances and following strict notification and disclosure rules.

This class action lawsuit alleges that Wells Fargo has systematically engaged in the practice of obtaining collateral protection insurance and billing borrowers in violation of state law and without the required notice. Wells Fargo can only obtain collateral protection insurance and charge borrowers if the borrower fails to provide evidence that the property used as collateral is otherwise not protected with insurance coverage. The class actions lawsuit alleges that Wells Fargo has systematically engaged in the practice of unilaterally obtaining collateral protection insurance at the borrowers' expense even when the borrowers have provided evidence of other applicable insurance coverage. In addition, the class action lawsuit alleges that Wells Fargo failed to notify borrowers that it had purchased collateral protection insurance and that collateral protection insurance was not required if the borrowers could provide proof that they actually had insurance on the collateral at the time.