By Jonathan Stempel
(Reuters) - A new lawsuit accuses Wells Fargo & Co <WFC.N> of racketeering violations and fraud after the bank admitted to charging several hundred thousand borrowers for auto insurance they did not ask for or need, causing many delinquencies.
The proposed class action filed on Sunday in San Francisco federal court deepens the fallout from the latest bad practice uncovered at Wells Fargo.
- PHOTOS: NYC 2019 Pride Parade31 Pictures
It follows the scandal in which the third-largest U.S. bank has said employees created as many as 2.1 million unauthorized customer accounts to meet sales goals.
Wells Fargo said late last week it would refund about $80 million to an estimated 570,000 customers who were wrongly charged for auto insurance from 2012 to 2017, including roughly 20,000 whose vehicles were repossessed.
The San Francisco-based bank made its announcement less than three hours after The New York Times wrote about an internal report prepared for executives that detailed improper charges.
Wells Fargo said it halted the charges last September after customers expressed "concerns."
But according to the lawsuit, refunds to defrauded customers are not enough.
"Wells Fargo has long lost the right to decide what is best for its customers," Roland Tellis, a lawyer for the plaintiffs, said in an interview.
"Refunds don't address the fraud or inflated premiums, the delinquency charges, and the late fees," he added. "It will be up to a jury or court to decide the appropriate remedy."
Wells Fargo spokeswoman Catherine Pulley declined to comment on the lawsuit, but in an email added: "We are very sorry for the inconvenience this caused impacted customers and we are in the process of notifying them and making things right."
The lawsuit is led by Paul Hancock, a 34-year-old marketing consultant from Indianapolis.
He said Wells Fargo charged him $598 for insurance though he repeatedly told the bank he had coverage from Allstate, and imposed a late fee after the unnecessary policy took effect.
The lawsuit seeks unspecified damages, which could be tripled under federal racketeering law, for borrowers nationwide, and in California and Indiana.
"If refunding premiums was just the start, this could be a nine-figure case," Tellis said.
Wells Fargo's accounts scandal resulted in $185 million of regulatory penalties and a $142 million settlement of private litigation, and cost former Chief Executive John Stumpf his job.
The case is Hancock v Wells Fargo & Co et al, U.S. District Court, Northern District of California, No. 17-04324.