DOJ Sues Allstate’s National General for Allegedly Deceptive Insurance Practices

The U.S. government has filed a civil lawsuit against National General Holdings Corp. and its subsidiaries, accusing the company of fraudulent practices under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). For more than ten years, National General allegedly force-placed its Collateral Protection Insurance (CPI) on vehicles financed through Wells Fargo, despite borrowers already having the necessary insurance through other carriers. This practice reportedly affected over 655,000 vehicles, leading to unnecessary insurance charges, late fees, negative credit impacts, and even vehicle repossessions.

Principal Deputy Assistant Attorney General Brian M. Boynton emphasized that the Department of Justice is committed to protecting consumers from deceptive business practices. U.S. Attorney Eric G. Olshan for the Western District of Pennsylvania highlighted the significant harm caused to car buyers, including residents of Pennsylvania, who faced financial hardships due to these alleged actions. The lawsuit contends that National General’s tracking system was knowingly deficient, resulting in a high rate of false placements and thousands of borrower complaints.

The government seeks penalties under FIRREA, citing predicate acts of mail fraud, wire fraud, and bank fraud. The case, handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Western District of Pennsylvania, underscores the federal commitment to combatting fraud in the insurance industry and holding companies accountable for their misconduct.