Wells Fargo & Co. and National General Insurance Co. have agreed to pay $432 million to resolve claims the companies engaged in an unlawful insurance scheme — an increase compared with a June 6 court filing that proposed a $393.5 million settlement. 

In the proposed class-action settlement, Wells Fargo agreed to pay $386 million, with National General paying $7.5 million. However, the new development may change the amount Wells Fargo and National General will pay individually. 

According to the class action, both companies engaged in an “unlawful scheme to force millions of Wells Fargo auto loan customers to pay for unnecessary and unwanted Collateral Protection Insurance.” Wells Fargo’s original settlement, according to a remediation plan, was proposed at $64 million. 

“Reaching this agreement, which leverages remedies available in our existing remediation plan, is an important step in making things right for customers impacted by this issue,” Wells Fargo said in a statement provided to AFN. “We will continue sending individualized letters to customers that clearly set out the remediation amount due to them, as well as a check for that amount. This process will continue until the remediation is complete.”

Click here to read how the scheme played out, according to the filing. 

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A hyper-connected society has come to expect near-instantaneous business transactions. Whether it’s an Amazon purchase, concert tickets or a flight to London, consumers expect a quick, efficient experience. Although auto lending is more complicated than those purchases, lenders can leverage the latest technologies to deliver similar efficiency.

Many lenders have optimized loan application and underwriting processes. However, efficiency meets a roadblock at the funding stage. The digital process reverts to paper — printing, mailing, faxing and ink signatures bog down productivity.

In a competitive auto lending market where consumers have multiple sources of funding, decisioning speed shouldn’t be compromised by an inefficient funding process. Why frustrate a well-qualified applicant who is offered a risk-priced deal with a complicated, protracted funding process?

Lenders can eliminate funding process inefficiency through the use of e-contracts and e-signatures. Using relevant applicant information, loan terms and stipulations or required disclosures, e-contracting produces a digital contract in seconds and sends it electronically to applicants. E-contracts meet the expectations of millennials and market segments of all generations who expect a completely digital consumer experience. Convenience and security contribute significantly to a positive experience, giving consumers:

• Multiple methods to record e-signatures, including typed text, image uploading, voice recording or use of popular signature devices;

• Multiple identity authentication methods, including an email/security code, SMS text PIN delivery and knowledge-based authentication questions; and

• Support for multiple signers and signatures to ensure proper routing, sequencing and capture in the case of co-signers, stipulations or validations.

Lenders benefit from e-contracts and e-signatures, too. Lower processing costs, increased customer satisfaction and efficient document retention are enabled by:

• The ability to review and sign contracts via desktop computer or mobile device, which improves the likelihood of loan capture;

• Ensuring all documents have been properly reviewed and signed, which eliminates delays; and

• Eliminating paper storage costs by securely managing digital documents and records associated with the transaction.

Lenders should take care to avoid undermining success of rapid, consistent-quality lending decisions with an inefficient funding process. E-contracts facilitate a funding process that meets the “on-demand” expectations of today’s consumers and delivers cost savings.

With more than 20 years’ experience in the auto finance industry, Lana Johnson leads the charge to drive innovation as chief client officer at defi SOLUTIONS. defi SOLUTIONS is the Technology Partner of Auto Finance Excellence (AutoFinanceExcellence.org), a sister service of Auto Finance News.

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The California Consumer Protection Act (CCPA) goes into effect in January, and although California Attorney General Xavier Becerra has said his office won’t enforce the law until July, lenders should start preparing now, said Michael Benoit, partner at Hudson Cook. One important aspect of that preparation is understanding how exemptions in the Gramm-Leach-Blilley Act (GLBA) overflow into the CCPA.

The GLBA “requires financial institutions – companies that offer consumers financial products or services like loans, financial or investment advice, or insurance – to explain their information-sharing practices to their customers and to safeguard sensitive data,” according to the Federal Trade Commission’s website.

Lenders are exempt from the CCPA if the information that is collected, processed, sold or disclosed falls under the GLBA, Benoit said. “For finance companies, you are subject to the Gramm-Leach-Blilley privacy act rule, so there’s a major exemption, but it does not attach in a way that makes [financiers] completely immune to the bill,” he said, noting that lenders can take advantage of the exemption because of their status as financial institutions.

Further, if a lender obtains personal information – as defined in the CCPA – in order to deliver a financial product or service, that data could fall under the GLBA exemption, Benoit said. “If you provide GLBA-regulated data to a third party as GLBA permits, that data is still covered by this exemption.”

The GLBA exemption, however, doesn’t cover data breaches when consumers have the right to sue, Benoit said.

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Serious delinquencies — auto loans 90 days or more past due — for borrowers aged 18 to 29 years dropped 38 basis points to 3.8% year over year, marking this age group’s lowest delinquency level since 2Q15, according to the New York Federal Reserve’s third-quarter Report on Household Debt and Credit.

Percentage of borrowers aged 18 to 29 that transitioned to serious (90+ day) delinquency. Data from NY Federal Reserve and Experian

Though this age group’s serious delinquency level is the lowest its been in four years, the group still remains the segment with the highest rate of serious delinquency. Borrowers’ delinquency rates in their 30’s came in at 2.98%; 40’s at 2.32%; 50’s at 1.68%; 60’s at 1.41%; and 70+ at 1.75%.

Average delinquency rates across all age brackets came in at 2.34%, an increase of 4 basis points year over year.

Overall, total auto debt in the third quarter increased 3.9% year over year to $1.32 trillion.

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