The U.S. Department of Justice has filed a lawsuit against National General Holdings Corp. and its subsidiaries for allegedly placing unnecessary Collateral Protection Insurance (CPI) on hundreds of thousands of vehicles financed through Wells Fargo. This action reportedly occurred even when borrowers already had adequate insurance coverage.
Financial Impact on Consumers
The false placements of CPI led to borrowers facing significant financial burdens, including duplicative premiums, unwarranted late fees, negative credit impacts, and, in some cases, vehicle repossessions. The DOJ claims National General knowingly ignored their tracking system’s deficiencies.
Legal Framework
The complaint alleges violations under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), citing predicate acts of mail, wire, and bank fraud. This lawsuit represents a significant enforcement action to protect consumers from deceptive practices.
Broader Implications
This case underscores the importance of accurate insurance tracking and fair dealing in the insurance industry. The DOJ’s action aims to hold companies accountable and safeguard consumer rights.