Friday, August 4, 2017

Wells Fargo Forced Unwanted Auto Insurance on Borrowers

A Wells Fargo branch in New York. A report found that, by charging customers for useless auto insurance, the bank caused 25,000 wrongful vehicle repossessions. CreditSam Hodgson for The New York Times.
More than 800,000 people who took out car loans from Wells Fargo were charged for auto insurance they did not need, and some of them are still paying for it, according to an internal report prepared for the bank’s executives.
The expense of the unneeded insurance, which covered collision damage, pushed roughly 274,000 Wells Fargo customers into delinquency and resulted in almost 25,000 wrongful vehicle repossessions, according to the 60-page report, which was obtained by The New York Times. Among the Wells Fargo customers hurt by the practice were military service members on active duty.
Wells Fargo, one of the largest banks in the United States, is struggling to repair its image after a scandal in which its employees created millions of credit card and bank accounts that customers had never requested. That crisis, which came to a head last year, toppled Wells Fargo’s chief executive and led to millions of dollars in fines.
The bank also stands accused of having made improper adjustments to the terms of the home loans of customers who were in bankruptcy, which Wells Fargo denies.
Asked about the findings on auto insurance, Wells Fargo officials confirmed that the improper insurance practices took place and said the bank was determined to make customers whole.
Continue reading the main story
“We have a huge responsibility and fell short of our ideals for managing and providing oversight of the third-party vendor and our own operations,” Franklin R. Codel, the head of consumer lending at Wells Fargo, said in an interview. “We self-identified this issue, and we made the right business decisions to end the placement of the product.”
The report, which was prepared by the consulting firm Oliver Wyman, looked at insurance policies sold to Wells customers from January 2012 through July 2016. The insurance, which the bank required, was more expensive than auto insurance that customers often already had obtained on their own.
National General Insurance underwrote the policies for Wells Fargo, which began to require the insurance on auto loans as early as 2006. The practice continued until the end of September.
Wells Fargo’s headquarters in San Francisco’s Financial District. CreditMax Whittaker for The New York Times
Christine Worley, a spokeswoman for National General, declined to comment.
For borrowers, delinquencies arose quickly because of the way the bank charged for the insurance. Say, for example, that a customer agreed to a monthly payment of $275 in principal and interest on her car loan, and arranged for the amount to be deducted from her bank account automatically. If she were not advised about the insurance and it increased her monthly payment to, say, $325, her account could become overdrawn as soon as Wells Fargo added the coverage.
The report tried to determine how many Wells Fargo customers were hurt and how much they should be compensated. It estimated that the bank owed $73 million to wronged customers.
State insurance regulations required Wells Fargo to notify customers of the insurance before it was imposed. But the bank did not always do so, the report said. And almost 100,000 of the policies violated the disclosure requirements of five states — Arkansas, Michigan, Mississippi, Tennessee and Washington.
Wells Fargo took issue with some of the figures in its own report. In a statement, Jennifer A. Temple, a bank spokeswoman, said the bank determined only 570,000 of its customers may qualify for a refund and that just 60,000 customers in the five states had not received complete disclosures before the insurance placement. Finally, she said, the bank estimated the insurance may have contributed to 20,000 wrongful repossessions, not 25,000.
“We take full responsibility for these errors and are deeply sorry for any harm we caused customers,” Ms. Temple added.
Requiring borrowers to be insured is common in the mortgage arena, where banks expect customers to carry enough homeowners’ insurance to protect the property backing their loans. The term for the practice is “lender-placed insurance.” Pressing such insurance on auto borrowers, however, is not as common: Representatives of Bank of America, Citibank and JPMorgan Chase said they did not offer the policies, though some smaller banks do.
In the Wells Fargo arrangement, National General receives all of the commissions on the insurance it sold to the bank’s borrowers. But for a time the bank shared in those revenues. Wells stopped sharing in the commissions in February 2013, according to the report.
Asked about the bank’s insurance practices, Bryan Hubbard, a spokesman for the Office of the Comptroller of the Currency, Wells Fargo’s regulator, said, “I cannot comment on specific ongoing supervisory matters or potential pending actions pertaining to a particular bank.”
Wells Fargo borrowers sustained financial damages beyond the costs of the insurance, the report said. The harm also included repossession costs, late fees, charges for insufficient funds and damage to consumers’ credit reports.


From sham accounts to releasing client data, Wells Fargo has drawn negative attention several times over the past year.
  • Client Data Mistakenly Released

    “There are thousands of documents in here that the public should never see,” said a former Wells Fargo employee.
  • Improper Mortgage Changes

    “When I realized it was a pattern of filing false documents with the federal court, that was appalling," said a lawyer who assumed the bank had made a clerical error.
  • $185 Million Fine for Sham Accounts

    Regulators said the illegal practices, first reported in 2013, reflected serious flaws. The bank fired 5,300 mostly low-level employees.
  • Ex-Workers File Suits

    “These are the people who have been left holding the bag,” said a lawyer for the workers who did not create improper accounts and did not meet sales goals.
  • ‘Lions Hunting Zebras’

    In opening those accounts, the bank targeted immigrants who spoke little English and older adults with memory problems, ex-workers said.
  • Scrutiny for U5 Files

    “It’s like being blackballed,” said a lawyer who specializes in Finra arbitration. “It can be a showstopper for a career.”
  • Smothering Customer Lawsuits

    The bank is killing lawsuits by moving them into private arbitration. “It is ridiculous,” said a woman suing over sham accounts.
In recent years, consumers have complained to federal regulators about lender-placed insurance on auto loans, the Consumer Financial Protection Bureau’s database shows. Many complaints identified Wells Fargo. In one example, an unidentified Wells Fargo customer reported providing proof to the bank on three occasions that the car was already insured and the new insurance was unnecessary, only to continue receiving calls from bank employees demanding payment of insurance charges.
Wells Fargo automatically imposed the insurance through its Dealer Services unit. Its website says it has more than four million customers and provides a variety of banking services to 14,000 auto dealers around the nation. It says the company’s lender-placed auto insurance “may be considerably more expensive than insurance you can obtain on your own.”
Such policies typically cost more than $1,000 a year, not counting interest. (Customers could pay them in full or finance them over time.) If a car was repossessed, the bank might charge a reinstatement fee of as much as $500, so a borrower could face $1,500 in charges.
Here is how the process worked: When customers financed cars with Wells Fargo, the buyers’ information would go to National General, which was supposed to check a database to see if the owner had insurance coverage. If not, the insurer would automatically impose coverage on the customers’ accounts, adding an extra layer of premiums and interest to their loans.
When customers who checked their bills saw the charges and notified Wells Fargo that they already had car insurance, the bank was supposed to cancel the insurance and credit the borrower with the amount that had been charged.
The Oliver Wyman report indicated that many customers appear not to have notified Wells Fargo of the redundant insurance. This may have been because their payments were deducted automatically from their bank accounts and they did not spot the charges.
According to documents on a Wells Fargo website titled “understanding your auto loan,” the bank had strict rules about the order in which it would apply a customer’s car payment to costs associated with the loan: First to be deducted from a payment would be the interest owed on the car loan. Then the bank would deduct interest charged on the lender-placed insurance. The third deduction would be principal on the loan, followed by the amount of premium owed on the insurance.
This payment structure had the effect of increasing the overall interest borrowers paid on their loans, the Oliver Wyman report noted, because fewer dollars went to reducing the principal outstanding.
Wells Fargo was also aggressive in repossessing vehicles: Some customers endured multiple repossessions, the report said.
Last fall, Wells Fargo Dealer Services had a run-in with regulators, and it agreed to pay $4 million in a settlement with the Justice Department over illegally repossessing cars of military service members. Since that settlement, three top executives have left the Dealer Services division.

Cindy Sherman Just Made Her Instagram Account Public and It’s Amazing

Cindy Sherman Just Made Her Instagram Account Public and It’s Amazing

The artist quietly made her account public, raising the question: can her posts be considered new work?
Cindy Sherman. Image Courtesy ANGELA WEISS/AFP/Getty Images.
Before the age of social media and its painstakingly sculpted personae, Pictures Generation artist Cindy Sherman had already established herself as the art world’s reigning queen of self-reinvention, using the camera to morph into one character after another. Though her works are technically not self-portraits, Sherman’s method of turning the lens onto herself is uncannily appropriate to our times, in which the stage-managed selfie has become so ubiquitous that it’s now fodder for exhibitions and often cited as an art form in itself.
For an artist whose practice is based almost entirely on how she presents herself, Sherman has managed to remain camera-shy in her life outside of the studio. Yet, in a surprising move, the photographer has recently taken to Instagram to share images of herself that echo photographs typically reserved for gallery walls. Not only does this provide a generous look into her process for her fans, it also raises the question: Is Cindy Sherman using Instagram to make new work? After all, Richard Prince applied his appropriation-art approach to Instagram to acclaim, heated controversy, and profit—why shouldn’t Sherman embrace the medium as well?
The account, which mysteriously switched from private to public in recent months, is a mix of personal photos alongside Sherman’s ever-famous manipulated images of herself. (While the account is not verified with Instagram’s official blue check mark, artnet News understands that it is authentic.) The eerie images of herself began appearing in mid-May; the first one carries the caption, “Selfie! No filter, hahaha.”
What we see here is somewhat of a departure from the artist’s traditional model: the frame is tighter and closer to her face, in what is clear use of a phone’s front-facing camera. Plus, the subject matter is decidedly intimate in comparison to her usual work—the latest posts document a stay in the hospital. She may even be having fun with filters.
Take a peek below at a selection of images from the account. Whether they constitute a new series or not, the images provide a heady glimpse into the life and mind of the artist.

Follow artnet News on Facebook.


Now Dubbed ‘Okey Dokey,’ a Viral New Collaborative Gallery Model Spreads to Germany

Now Dubbed ‘Okey Dokey,’ a Viral New Collaborative Gallery Model Spreads to Germany

Inspired by Condo, the latest iteration of the co-op phenomenon is coming to the Rhineland.
Logo. Courtesy Okey Dokey.
As the slew of recent closures in New York, London, and Berlin show, existing market models are becoming increasingly unsustainable for mid-sized galleries. The costs associated with participation in major art fairs are often prohibitive for middle-market dealers, who have to sell out the booth to even come close to breaking even.
Like fellow dealers in London and New York, gallerists based in Germany’s Rhineland region are searching for alternatives through collaboration, and have launched a new gallery-share initiative called Okey Dokey, set to take place in September. Initiated by with-it galleries Jan Kaps, Max Mayer, and Ginerva Gambino, Okey Dokey will bring out-of-area galleries together at nine different spaces in Düsseldorf and Cologne.
Over a decade ago, one could argue that Berlin led the path in the search for new models with the launch of Berlin Gallery Weekend; lacking a strong fair, the format had proven successful in bringing collectors to a city without a significant collector base. Now, when even collectors are fatigued with too much traveling, dealers are finding new ways to come to them.
View of Ginerva Gambino gallery from outside, courtesy Ginerva Gambino.
These kind of co-operative setups, similar to Vanessa Carlos‘s Condo, are thriving. With Condo, which is just finishing up a successful New York debut and is in development for iterations in Shanghai and Mexico City, Carlos initiated a model in which galleries temporarily lend their spaces to foreign dealers, pooling resources and sometimes collaborating on exhibitions.
Okey Dokey co-organizer and Ginerva Gambino founder, Laura Henseler, discussed the striking name for the new platform with artnet News. It might call to mind the late Konrad Fischer, the influential German dealer who changed the game for contemporary art galleries when he opened his Düsseldorf gallery in 1967. “It is true that the name references Fischer’s infamous catch phrase,” Henseler conceded, “though the intent behind it was not necessarily to reference him specifically but rather the Rhineland’s longstanding tradition of collaboration and exchange.”
The handle embodies the region’s can-do attitude well. Düsseldorf and Cologne enjoyed an industrial boom after the war and became important centers for contemporary art; the Rhineland is now home to an abundance of museums, galleries, and kunstvereins, as well as solid and savvy collectors.
The region’s cultural cornucopia is what makes the project viable: it draws mid-market dealers from elsewhere who want access to the Rhineland’s collector base but might not be able to join the local art fair, Art Cologne.
Speaking to artnet News, the organizers of Okey Dokey said that in addition to Condo, their platform was modeled after other projects, too, such as the Köln Show, which took place in Cologne in 1990 and was also organized by nine galleries without institutional help.
“The Rhineland, with all its institutional structures, its history and important collections, has always been a supportive place for emerging art,” co-founder Jan Kaps told artnet News. “Introducing our colleagues to these structures was a key point.”
“It’s quite an honor to welcome so many galleries and spaces with such unique programming,” he added. “More important is probably the idea of collaborating on an actual show, to share thoughts and content, as well as the idea of taking the visitor back to the actual gallery space,” he went on.
Jan Kaps’s eponymous gallery on Cologne’s Jülicher Strasse, will host Weiss Falk from Basel and Edoaurd Montassut from Paris. Adding to the already impressive range of Okey Dokey, Jan Kaps will also host young Viennese publishing house, Sax Publishers, which develops its publications in close collaboration with artists.
Also in Cologne, Henseler’s 35-square-meter emerging-art space will be hosting Ilaria Leoni’s Ermes Ermes gallery from Vienna/Rome, Paul-Aymar Mourgue d’Algue’s Geneva gallery Truth and Consequences, and Fiona Bate’s Sandy Brown, from Berlin. Like Ginerva Gambino, the foreign visitors have forgone the tradition of naming their spaces after their founders, and are fitting matches for Henseler’s upstart space. Together, they will curate a show on domesticity. What exactly we can look forward to seeing is still in the works, but Bate is set to bring pieces by Timothy Davies.
Timothy Davies, Creme Caramels (VI), (2016). Image courtesy Sandy Brown
Fifty kilometers to the North, in Düsseldorf, Max Mayer is getting ready to host New York’s Miguel Abreu Gallery, which will bring works by Rey Akdogan, as well as galleries Misako & Rosen, and Arcadia Missa.
Tokyo gallery Misako & Rosen will bring an ephemeral installation by Irish artist Fergus Feehily. Gallery director Jeffrey Rosen told artnet News that pressures facing Tokyo galleries are slightly different to those abroad. Galleries over there have a low overhead, but those gains are neutralized by the lack of exposure that comes from operating in a country without a strong culture of collecting contemporary art.
“Based in Tokyo, with a very limited market for contemporary art, we have been forced to be resourceful,” he said. “One of our most important strategies has been to partner with like-minded colleagues in similarly peripheral positions within the international art ecosystem and also to offer our support to alternative models to the standard art fair.”
Also visiting Max Mayer will be Rosza Farkas’s gallery, Arcadia Missa. Opened in the wake of the recession as non-profit project space, the gallery went commercial in 2014. When asked why she chose to participate in Okey Dokey, Farkas told artnet News: “For me it wasn’t a market decision, more that I think it’s great for one of my artists to have exposure in another space and a country where they aren’t as well-known.”
The gallery has participated in both editions of Condo and its history as a non-commercial space means Farkas is no stranger to collaboration. “Condo in London has shown that an organized approach to collaboration brings us new audiences, so when Max contacted me I of course immediately liked the idea,” said Farkas. She will be bringing work by Phoebe Collings-James, who has a solo exhibition opening the same weekend in New York’s 315 Gallery.
The sense of camaraderie among the gallerists of Okey Dokey provides a contrast to the fierce competition typically associated with the commercial art sphere. There’s a surprising eagerness to collaborate, which Laura Henseler explained, is nothing new: “Everyone involved regularly shares their experiences and opinions, and works together in one way or another. One side of Okey Dokey is to make these relationships visible and to expand them.”
Whether the future for mid-sized galleries lies solely in collaborative models like this has yet to be established. artnet News posed the question to the organizers of Okey Dokey, who didn’t see co-operative models as a viable alternative to having one’s own gallery, merely an important addition.
“Like on so many other levels, for example programming, galleries need to both have an eye on the local scene, and an awareness of the national and international discourses in which they embed their program,” said Max Mayer. “Galleries are in that sense an unavoidable exchange place between the local and global. What Okey Dokey does, is give an internationally relevant project a locally specific form.”
The timing of Okey Dokey’s preview weekend comes just before the beginning of Berlin Art Week, but for anyone wondering if the organizers were hoping to capitalize on international art collectors in the country for the more established event, Henseler assured us that the dates are coincidental; galleries in Germany have always opened in early September.
Fergus Feehily, Long Hall (2017). Photo: Trevor Good, courtesy of MISAKO & ROSEN.
All considered, the nod to Konrad Fischer in the project’s name is fitting. From the get-go, Fischer brought American artists like Bruce Nauman and Carl Andre to Europe for the first time. Unwilling to wait around for more established arbiters of taste to set trends, he made sure galleries, and indeed the Rhineland itself, made their own context in the art world.
Okey Dokey will run September 8 – September 30. See the full list of galleries participating, and some examples of the artwork below.
Delmes & Zander, Cologne
Neue Alte Brücke, Frankfurt
Galerie 1900-2000, Paris
Drei, Cologne
Kirchgasse, Steckborn
Lulu, Mexico City
Park View, Los Angeles
Ginerva Gambino, Cologne
Ermes Ermes, Vienna/Rome
Truth and Consequences, Geneva
Sandy Brown, Berlin
Lucas Hirsch, Düsseldorf
Stereo, Warsaw
Lomex, New York
Jan Kaps, Cologne
Weiss Falk, Basel
Edouard Montassut, Paris
Sax Publishers, Vienna
Linden, Düsseldorf
Max Mayer, Düsseldorf
Arcadia Missa, London/New York
Miguel Abreu Gallery, New York
Misako & Rosen, Tokyo
Studio for Propositional Cinema, Düsseldorf
and Barbara Rüdiger
Anna Sophie Berger 
Rob Tufnell, Cologne
Tanya Leighton, Berlin
Follow artnet News on Facebook.

Article topics