Investments Lending

Did Wells Fargo fake accounts extend to Prudential insurance?

Investigation launched after whistleblower lawsuit filed

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Investigators in California and New Jersey are set to launch a probe into Wells Fargo over whether the bank’s recent fake account scandal extended beyond credit cards and bank accounts and into life insurance policies from Prudential Insurance.

Wells Fargo was recently fined $185 million after 5,000 of the bank’s former employees opened as many as 2 million credit card and bank accounts without authorization in order to get sales bonuses.

Now, a whistleblower lawsuit filed by three former Prudential employees accuses Wells Fargo of opening up insurance policies and automatically deducting the insurance premiums from customers’ accounts without prior authorization.

The New York Times has the details on the whistleblower lawsuit, which also led to Prudential suspending its sales of life insurance polices through Wells Fargo until the insurer completed an investigation of its own.

From the New York Times:

The move comes after a lawsuit was filed claiming Prudential had tried to hush up evidence that Wells Fargo bankers — who were supposed to market the low-cost Prudential policy, MyTerm, to their customers — opened fraudulent accounts in customers’ names and had premiums withdrawn from their bank accounts without their consent or knowledge.

Last week, three former Prudential employees filed a whistle-blower lawsuit claiming that an internal review at Prudential had found voluminous evidence that Wells Fargo employees took out MyTerm policies for customers without telling them and that many of the victims did not speak English.

As a result of that lawsuit being filed, the states of California and New Jersey are launching investigations as well.

The California Department of Insurance announced Monday it is launching an investigation into the allegations made by the former Prudential employees.

According to the California Department of Insurance, its investigators will review the allegations, including working to determine whether possible violations of California laws requiring persons transacting insurance to have an insurance license issued by the department occurred.

“Investigators with the California Department of Insurance will investigate new allegations of fraud and misconduct made by former Prudential employees regarding Wells Fargo and its employees,” said California Insurance Commissioner Dave Jones.

“Former Prudential employees who filed a whistleblower lawsuit allege that Wells Fargo signed up consumers for Prudential insurance policies without consumer permission much as Wells Fargo admitted its employees illegally signed up consumers for bank products without permission,” Jones added. “We will also examine Prudential Insurance company's practices in this regard.”

Jones’ office said that it will conduct its independent investigation into this issue in collaboration with the New Jersey Division of Insurance, which is also investigating this issue.

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