Prudential Suspends Sales of Its Life Policies by Wells Fargo

2016-12-12 22:04:10

 

Prudential Suspends Sales of Its Life Policies by Wells Fargo

Prudential, the insurance company, said Monday that it was suspending sales of its life insurance policies through Wells Fargo until Prudential completed an investigation into the bank’s sales tactics.

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Prudential policy, MyTerm, to their customers — opened fraudulent accounts in customers’ names and had premiums withdrawn from their bank accounts without their consent or knowledge.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.

The employees had been fired by Prudential — in retaliation, they say, for trying to prod their bosses to act more aggressively on the findings. Prudential disputes this account; Scot Hoffman, a Prudential spokesman, said the employees were fired “for appropriate and legitimate reasons that were entirely unrelated to Prudential’s business with Wells Fargo.”

Prudential said Monday that it was preparing a formal statement to address the timing of the announcement that it was suspending sales of MyTerm through Wells Fargo. At least one other bank, BB&T, continues to sell the product.

Prudential would appear to be the first partner company of Wells Fargo to get caught in the fallout from the bank’s admission three months ago that thousands of its employees had opened unauthorized accounts in bank customers’ names. The bank has fired more than 5,000 employees and paid fines of $185 million in connection with the scandal.

“We stand behind the MyTerm product but have decided to suspend sales of that product through Wells Fargo’s retail banking franchise until we have all the facts about whether it is being distributed properly and in the best interest of customers,” Steve Pelletier, chief operating officer of Prudential’s United States businesses, said in a written statement.

Prudential’s news release included language seemingly meant to show that the company was diligent in tracking the relationship with Wells Fargo. “Last year, Prudential’s individual life insurance business surveyed Wells Fargo customers about their experience with MyTerm, including reasons why some of them allowed the product to lapse,” the release said. “The customer responses did not indicate potential fraudulent activity. Following the revelations about Wells Fargo’s sales practices this fall, Prudential expanded its review into how the product was sold and asked for Wells Fargo’s assistance in gathering all the necessary facts.”

Also on Monday, Alex Perea, a Wells Fargo customer who said he had been victimized by the insurance scheme, filed a lawsuit against Prudential. He and his lawyers are seeking class-action status for the case.

Mr. Perea, of Arizona, received a collections notice in October about unpaid premiums on a MyTerm policy, according to his complaint. A Wells Fargo customer since 2010, Mr. Perea “never authorized anyone to seek life insurance on his behalf” and was unaware that a Prudential policy had been taken out in his name, he said in the lawsuit.

When he called Prudential’s customer service center, the insurance company refused to cancel the policy, the complaint said. Mr. Perea later discovered that some premiums for the policy had been deducted from his Wells Fargo savings account.

Through his lawyer, Neil Mullin, Mr. Perea declined to comment further on his complaint. The case was filed in Federal District Court in New Jersey, the state where Prudential is headquartered.

Mr. Hoffman said Prudential did not have an immediately comment on Mr. Perea’s lawsuit.

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