Whistleblowers Allege Wells Fargo Signed Customers Up for Insurance Without Their Consent

By:
Chris Gaetano
Published Date:
Dec 13, 2016
Wells Fargo

As Wells Fargo tries moving on from its phantom account scandal, the bank now faces new allegations that it signed customers up for insurance products with neither their knowledge nor consent, with premium payments coming from dormant accounts, according to CNN Money. The allegations come from a trio of whistleblowers from Prudential who issued a complaint with the SEC that they were retaliated against after uncovering misconduct. 

The whistleblowers allege that some Prudential insurance products owned by Wells Fargo customers listed obviously-fake home addresses on their applications like "Wells Fargo Drive" or phony email addresses such as "noemail@wellsfargo.com," according to CNN. They also found a 70 percent lapse rate for policies sold to Wells Fargo customers in 2014, the first year they were sold in the bank, as well as sales spikes near the end of each quarter. There is also the possibility that Wells Fargo, similar to in its phantom account scandal, targeted those perceived to have limited English skills, as the policies were sold predominantly to those with Hispanic sounding last names, according to CNN. 

The whistleblowers were placed on unpaid administrative leave after, they allege, refusing to go along with what they said was a cover-up. The SEC complaint says the whistelblowers have no supporting documentation, however, because they were escorted out of the building before they could collect it. The accusation has none the less sparked a probe into the matter, with Prudential announcing that it has suspended the distribution of its MyTerm insurance policies, the low-cost life insurance plan at the center of the accusations, through all Wells Fargo branches pending the results of a review. 

Meanwhile, Wells Fargo is quietly trying to resolve its other massive scandal, where workers had set up two million sham accounts without the knowledge or consent of its customers, through directing complaints to arbitration, rather than litigation, according to the New York Times. While some have been skeptical of the bank's legal ability to do this, Wells Fargo has argued that customers agreed to direct disputes to binding arbitration when they signed the agreement to open up an account with the bank. While the Times quotes an attorney skeptical that she's bound by these conditions for an account she never agreed to in the first place, the Times said judges have mostly sided with the bank on this matter. 

Click here to see more of the latest news from the NYSSCPA.