Feds sue National General over alleged insurance scheme

The federal government on Thursday sued National General Holdings Corp. alleging that the insurance company — with a large call center in Moon — ran an eight-year scheme defrauding hundreds of thousands of people across the country.

The 70-page suit, filed by the U.S. Attorney’s Office in the Western District of Pennsylvania, alleges the company forced customers who financed their vehicles through Wells Fargo to pay for collateral protection insurance, even though they had car insurance through other carriers.

The scheme, including allegations of mail fraud, wire fraud and bank fraud, went on from 2008 to 2016, the government said.

The customers, even though they often provided proof of insurance, were forced to pay premiums to National General. In some cases, when the payments weren’t made, the suit said, the customers’ vehicles were repossessed.

In other instances, the lack of payment damaged those customers’ credit.

The suit also alleges that National General’s computer system failed to accurately track whether customers had insurance.

In a written statement, National General said, “These allegations are false, and we are committed to sharing the facts.”

The Justice Department went after Wells Fargo for the same conduct in 2017.

That suit alleged that nearly 2 million customers were bilked out of millions of dollars. According to that complaint, filed in California, 275,000 customers who paid for the unnecessary insurance, were forced into delinquency, and 25,000 had their vehicles repossessed.

That case settled in 2019 for more than $380 million.

In a statement, Wells Fargo said it stopped offering collateral insurance in 2016.