• Report: #675786
Complaint Review:

Wells Fargo Dealer Services

  • Submitted: Mon, December 27, 2010
  • Updated: Tue, March 20, 2012

  • Reported By: John Z — Mesa Arizona United States of America
Wells Fargo Dealer Services
Phoenix, AZ greater Phoenix area, Arizona United States of America

Wells Fargo Dealer Services formerly Wachovia Dealer Services on time and up-to-date on insurance and payments, and they made a mistake and wouldn't fix it, repo'd van greater Phoenix area, Arizona

*Consumer Comment: Class Action Against Wells Fargo Forced Insurance Practices

*Consumer Suggestion: This is exactly why you need to STAY OFF THE PHONE!!!

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Wells Fargo Dealer Services (WFDS) applied an insurance charge to our car loan. When we asked why, they said that their records showed that we had a lapse in insurance. We did not, and contacted our agent, and repeatedly faxed and emailed (pdf) copies to show that there was no lapse in coverage. After talking to numerous WFDS reps, we finally had someone say, that we were right, she was sorry, and that she would take off the charges and all would be well.

Later that month, we payed our car payment, on-time. However, unbeknownst to us, the insurance fee was never removed, and instead of our car payment going to or car loan, it was used to pay the insurance. We later received numerous phone calls from a variety of WFDS people, all of which had extensions that they could not be reached at, informing us that we were late on our car payment.

So we went through the whole process again of proving that we had insurance, that they payment that was just made was supposed to be for the car payment and not insurance that we didn't need or want. (Funny enough, during one phone call, while on the phone with my wife, a different rep called me to talk about the same thing. We have since learned that they DO NOT put notes onto your account like they say, and often enough, the left hand has no idea what the right hand is doing.) After many days of phone tag, different reps, not being transferred to managers, we finally got someone on the phone on a Tuesday that said, "You're right" and said that she would take care of it and apply the payment to our car payment and fix the insurance debacle.

That following Sunday, as my wife and I and our four children are walking out the door to church, the repo man shows up. He was very gracious, and explained that if we didn't release the car to him, he would call the sheriffs department, he would still get the car, and we would be facing legal fees for the sheriffs dept as well. He let me take my kids to church and clean out the minivan, showed me the paper work, and gave me his card. Not bad for a repo guy.

We promptly call WFDS on Monday, and they showed no record of repossessing our car. The rep assured us he would look into it and call us the next day. He called on Wednesday (no one had answers on Tuesday either, and he couldn't be reached at his extension), and told us that his department no longer handles our account, and gave us the "repossession" department. No one answered or returned our calls there. On Friday, we got a hold of someone in the "repo" department, who told us that we had to fill out some paperwork authorizing us to talk over the phone about the account. They mailed us the paperwork, we filled it out and mailed it back priority.

They then said they couldn't do anything about the charges and that it is what it is, and that we would be receiving information in the mail. We received more paperwork on a Wednesday stating that we owed $5500 by Friday to them by money order only (and whatever fees the repo yard charged) or the car would be sold at auction and we would owe the difference. I'm a school teacher, I don't have that kind of money just lying around for emergencies like this.

We owed less than $5500 on the van before they repo'd it. We told them to keep the van, and we'd see them in court if they wanted to pursue it. Consequently, our insurance agent called us a few weeks later saying a claim had been made on our van by WFDS and that apparently, when they repo'd it, they did some significant damage to it and wanted our insurance company to pay for it. We said no. I'm sure now they won't get any money for it at auction, and they will fight me for the rest of what we owe.

I tried on numerous occasions to pay it off in full. They wouldn't let me, or would charge me such huge processing fees that I just couldn't justify it. I signed an agreement and intended to payoff the car, but what they did was criminal and has left my family in the lurch and I don't feel that I owe them anything.

Can anyone help me please?

This report was posted on Ripoff Report on 12/27/2010 10:57 PM and is a permanent record located here: http://www.ripoffreport.com/reports/wells-fargo-dealer-services/greater-phoenix-area-arizona-/wells-fargo-dealer-services-formerly-wachovia-dealer-services-on-time-and-up-to-date-on-i-675786. The posting time indicated is Arizona local time. Arizona does not observe daylight savings so the post time may be Mountain or Pacific depending on the time of year.

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#1 Consumer Comment

Class Action Against Wells Fargo Forced Insurance Practices

AUTHOR: hunger4justice - (United States of America)

 1000 W. McNAB RD. Ste.
150, POMPANO BEACH, FL 33069 Tel:
(954) 942-5270  Fax: (954) 942-5272 Email: info@jeffreygolantlaw.com

Wells Suffers Setback in Force-Placed Case

Jeff Horwitz

FEB 22, 2012 6:49pm ET

A federal judge has granted class action status to plaintiffs in a much-watched force-placed insurance case against Wells Fargo & Co. and QBE Insurance Inc., opening the door to high-stakes litigation over alleged industry kickbacks.

The Tuesday ruling in Williams v. Wells Fargo et al by Judge Robert Scola, Jr. of U.S. District Court for the Southern District of Florida reinforces banks' vulnerability to legal attacks over their purchase of so-called forced-placed insurance on behalf of
borrowers whose homeowner policies have lapsed.  Force-placed hazard insurance is designed to protect creditors in the
event that an uninsured borrower's property is damaged. Mortgage contracts typically entitle banks to purchase such policies on behalf of homeowners who fail to maintain hazard coverage themselves and to pass on to them the cost of the coverage.

The Florida suit does not take issue with the cost of such policies directly but instead accuses Wells and QBE of inflating the cost of such coverage by secretly paying themselves unearned commissions.

Scola cited evidence that the activities of Wells and QBE, an Australian insurer that administers Wells' force-placed insurance
program, amounted to unjust enrichment and a breach of good faith. In a sometimes harshly worded opinion, Judge Scola accused the bank of threatening to retaliate against the 20,000 homeowners eligible to become class members in the Florida litigation.

"Wells Fargo has unabashedly set out its threats to retaliate against any homeowner seeking to avoid alleged excessive and inflated force-placed insurance premiums," Scola wrote. The judge added that he intends to prevent the bank from "establishing post-litigation, vindictive business practices."  For Wells and QBE the stakes are large, with more than $50 million in premiums at issue in Florida alone. Evidence introduced into the public record in the case could result in further headaches at a time when
banks force-placed insurance practices face significant scrutiny. New York State's Department of Financial Services has sent out numerous subpoenas to banks and insurers as part of an ongoing investigation, and the Office of the Comptroller of the Currency has also expressed interest in force-placed market.

QBE pays out 40% of total force-placed premiums as commission to its subsidiaries and Wells Fargo, the Florida plaintiffs charge. And only 7.6 cents of every dollar of premium revenue QBE collects goes to paying claims, according to a plaintiffs' analysis based on QBE data. Such a low payout ratio would be regarded as unacceptable in most states. Guidelines laid out by the National Association of Insurance Commissioners instruct insurers to aim for a payout of 60%.

Attorneys for the plaintiffs also attacked how QBE sets its rates. Camley Delach served as QBE's lone actuary for force-place policies written on behalf of Wells Fargo in Florida, according to a deposition discussed at the class certification hearing. It was her job to gauge the financial risks the underwriter faced. But Delach said in a deposition that she works from her Pennsylvania home, performs no actuarial work to determine QBE's prices, and has "no idea" why QBE prices its policies the way it does.  "It is not necessary for someone to be an actuary to critique this procedure," Judge Scola wrote in his opinion certifying the plaintiff

The information about the Wells and QBE practices was presented in open court on February 9. American Banker obtained the case files when they were originally posted to PACER, an online database of federal court records.

Wells Fargo and QBE accused plaintiffs attorneys of "misconduct" for bringing the information into a public forum. "Defendants have done
everything within their control to protect the confidentiality of their
business information," Wells and QBE stated.
The defendants subsequently argued to the court that a "manifest
injustice" would occur if the details of their business relationship
were made public. The court agreed on February 22 to seal or redact
related information, including much of that described above.
Emails presented in those documents suggest that Wells employees
themselves were uncomfortable with the high premiums QBE was charging
Wells' borrowers. Following an American Banker article
alleging that force-placed insurers were charging as much as 10 times
the cost of borrowers' previous hazard insurance, an unnamed Wells
executive allegedly told colleagues that the bank needed to rein QBE in.
"[P]remium pricing in unregulated states [those where QBE is not
subject state rate caps] is unacceptable, requires immediate address,
significant quality/oversight concerns based on loan cited in AB [American Banker]
article and the issue found by Escrow team," an unnamed Wells executive
wrote in an email to colleagues that was read by a plaintiffs' attorney
in court and cited in a now-sealed PowerPoint presentation. These
issues needed to be raised with "senior QBE leadership," the Wells
official wrote.
"The quotes from Wells Fargo emails were taken out of context," Wells Fargo spokesman Tom Goyda wrote to American Banker
last week. In a subsequent email, Goyda called the class certification a
"procedural" matter and said that Wells has no intention" of
retaliating against borrowers as the judge suggested. QBE declined to
comment on the case.
In court, the defendants have argued that their high margins on
Florida policies are warranted by risks posed by hurricane-related
Arguments made in the certification hearing suggest that the
plaintiffs' intend to focus their case on QBE's "surplus line" status.
As a 2011 American Banker story reported,
surplus line status exempts QBE from state rate caps and enables it to
charge Wells Fargo borrowers whatever the bank will allow. In return,
QBE pays Wells commissions on every policy written, even though the bank
directly performs little or no force-placed work. Plaintiffs attorneys
and consumer advocates have labeled this a pay-to-play arrangement, a
charge the defendants deny.
By law insurance agents obligated to seek to buy coverage from
state-regulated insurers first and only in the absence of such an option
to resort to surplus-line coverage. To protect borrowers and regulated
carriers, insurance agents are supposed to document a "diligent effort"
to find a regulated insurer. In the case of the Florida defendants, QBE
used its own employee, Michael Seminario, as the insurance agent.
Criticism of force-placed insurers goes beyond those selling
surplus-line coverage. Assurant Inc. is dominant participant in
Florida's force-placed market and is regulated in every other state in
which it operates.
A 2010 American Banker story
found that homeowner complaints about Assurant and QBE were similar,
with both companies being accused of paying unearned commissions to
banks, charging high rates and backdating policies to boost premium
revenues. One difference is that Assurant's financial filings indicate
it pays out the equivalent of 35% of premiums in claims.
"In submitting filings, our actuarial team considers a number of
factors including actual experience over a multi-year period,
reinsurance costs, and the significant catastrophe exposures and
potential loss costs in Florida to help establish our rates," an
Assurant spokeswoman wrote in an email.
QBE's unregulated status in some states and its freedom to charge
whatever premiums it wishes may put it and its bank clients
front-and-center in force-placed litigation. Wells argued during the
February 9 class certification hearing that borrowers charged for
force-placed insurance could have avoided it and therefore should not be
permitted to sue over its allegedly inflated price. The court was not
"That's like a defense for usury," Judge Scola said. "[Y]ou are going
to have a defense that they live a bad lifestyle which leads them to be
more in a position to be taken advantage of...? That makes no sense."
Following the Florida class certification, plaintiffs' attorneys intend to file similar suits in other jurisdictions.
"There will likely be national class actions," says Jeff Golant, one of the plaintiffs' attorneys on the case.

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#2 Consumer Suggestion

This is exactly why you need to STAY OFF THE PHONE!!!

AUTHOR: Steve - (U.S.A.)

This is exactly why people need to understand to STAY OFF THE PHONE!!! Phone calls do not protect your rights under the law, and if you ever go to court on this, you will have no proof. I know we all get busy and "don't have the time" to write letters, etc. But you have now learned that you need to find the time!

CERTIFIED MAIL, RETURN RECIEPT REQUESTED is the ONLY way to communicate in any financial or legal dispute. Always put the certified # in the body of the letter and keep a copy for your records, as this proves exactly what you sent Back up those mailed letters with NUMEROUS faxes to every fax # you can find for them.

Same with email. Saturate it. Make sure that you are the first priority every morning. I'm sure you do have a good case here for your losses due to their NEGLIGENCE, but you will have to get a lawyer and bring this action at your own expense.

I would do whatever it takes to clear this up as it will have a serious impact on your credit reports, and they can also come after you for a deficiency judgement on the sale of the vehicle.

Don't let this go, as I can assure you it is not over with. Your nightmare has not even begun yet. Guaranteed.

Get a lawyer right away. Whatever it takes.

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