Prudential Insurance Caught in Wells Fargo Scandal

Max Kellogg | Legal Staff Writer

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Photo credit: wsj.com

Wells Fargo customers have filed a class-action lawsuit against Prudential Insurance Co., alleging the company worked with Wells Fargo to sign up low-income customers for life insurance policies without their permission or knowledge. This is the latest development in the Wells Fargo consumer fraud scandal, where the bank has been under investigation by the Securities and Exchange Commission for allegedly signing up customers with several million unauthorized bank and credit card accounts and charging the customers fees on the ghost accounts. The bank confirmed it had terminated 5,300 employees in recent years related to this conduct.

The new complaint filed Monday, December 12, alleges that Prudential worked alongside Wells Fargo to register customers for the MyTerm life insurance policies, withdrawing the premium fees from the customers’ Wells Fargo accounts. As an incentive for Wells Fargo employees to sell these policies, Prudential set up a “kickback” system, paying bonuses to whomever brought in new customers. The suit alleges that this system allowed Wells Fargo employees to register consumers for these policies without their consent and claims that Prudential was well aware of what was going on.

Arizona resident and class representative, Alex Perea, filed the lawsuit after receiving “threatening collection letters” from Prudential, although “at no time did Mr. Perea approve, sign up for or enter an agreement for” the insurance company’s MyTerm policy that was sold through Wells Fargo. According to the complaint, when he called Prudential’s customer service, the company refused to cancel the policy. Mr. Perea then realized that some of the premiums for the MyTerm policy had been taken from his Wells Fargo savings account. 

Plaintiffs’ attorneys claim the suit against Prudential is even stronger because of the testimony of three whistleblowers—former Prudential employees—who currently have a wrongful termination suit against the company. The attorneys believe that the potential class could contain tens of thousands of plaintiffs.

Steve Pelletier, the chief operating officer for Prudential said in a statement, “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.” The company has stated they will vigorously defend the product, calling the lawsuit completely without merit.

 This case is: Perea, et al v. The Prudential Insurance Company of America, et al, Civil Action No. 16, in the U.S. District Court for the District of New Jersey.

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