(Recasts to focus on broader sales issues, adds comments from investors and analysts, and details on accounts scandal)
NEW YORK, July 28 (Reuters) - New revelations that Wells Fargo & Co spent years enrolling unknowing borrowers in costly auto insurance has put the bank under new pressure to answer for a months-long scandal over sales practices that have harmed millions of Americans.
The latest news that 800,000 Wells Fargo auto borrowers were improperly charged for insurance rattled investors yet again, and sent its stock down 2.6 percent on Friday.
Shareholders, analysts, lawmakers and consumer advocates demanded answers about how the situation manifested, and why Wells Fargo did not disclose the problems sooner, given existing turmoil over phony deposit and credit card accounts opened in customers' names without their permission.
"This is a full-blown scandal again," said New York City Comptroller Scott Stringer, who oversees public pension funds that hold roughly 11.6 million Wells Fargo shares. "It's unbelievable, outrageous, sad, and yet quintessential Wells Fargo. This isn't just a corporate debacle. It's caused real human harm."
Stringer called on the bank to install a new independent chair and "immediately" disclose more information.
Wells Fargo first became aware of potential problems a year ago, when the auto lending business began receiving an unusually high number of complaints, Franklin Codel, head of consumer lending, said in an interview.
The auto insurance program was quickly suspended, and the problem escalated to senior management, the board and regulators, he said. Wells Fargo planned to delay public disclosure until it could notify affected customers and reimburse them.
"The problem with disclosing to the marketplace today or several months ago is customers start calling and asking when they're going to get their money," he said. "It's not a great customer experience to say, 'Yeah, we'll get back to you."'
The bank was prompted to issue a press release on Thursday evening after the New York Times reported that 800,000 of its auto borrowers were charged for insurance they did not need from January 2012 to July 2016.
Wells plans to return $80 million to 570,000 customers who qualify for a refund.
The latest revelations echo what happened at Wells Fargo branches across the United States for years. Under pressure to hit aggressive sales targets, thousands of employees signed up customers for deposit and credit-card accounts without their permission over a period of several years.
As part of a $190 million regulatory settlement in September, Wells said as many as 2.1 million phony accounts were opened. A class-action lawsuit against Wells Fargo puts the figure at 3.5 million.
Matthew Preusch, an attorney with Keller Rohrback, which filed that lawsuit, said his firm is looking into whether auto borrowers have claims against the bank.
"It's likely to result in consumer litigation," Preusch said.
Wells Fargo has previously said that it found no evidence of improper sales practices outside its retail banking operation.
An April report by the board of directors following an internal investigation did not mention auto insurance problems, nor did executives discuss them during a day-long investor event in May, nor while presenting at conferences and hosting calls to discuss quarterly results.
Behind the scenes, Wells Fargo's auto lending business has been going through an overhaul to improve risk management and install fresh leadership. Dawn Martin Harp, who headed the unit during the sales abuses, retired in April. Her deputy, Bill Katafias, also departed this year.
"Both of those executives, in my view, were held accountable for their actions," Codel told Reuters, including "from a compensation perspective."
Katafias did not return a call to his office at auto lender CRB Auto, where he is now CEO, and Martin Harp could not be reached.
Wall Street analysts expect the financial damage to go beyond the $80 million in reimbursements.
In a note on Friday, Piper Jaffray's Kevin Barker predicted the true cost would be "multiples" of that figure, with lawsuits and further customer remediation. The added cost of insurance pushed 274,000 customers into delinquency, and led to at least 20,000 wrongful repossessions, according to the Times.
Since 2012, the U.S. Consumer Financial Protection Bureau (CFPB) has received 1,826 complaints about Wells Fargo vehicle loans or leases.
Many customer narratives in the regulator's public database detail being charged for insurance when the car was already insured elsewhere, not being able to have erroneous insurance charges removed, and problems with making payments.
One customer from 2014 called Wells immediately after realizing unneeded insurance had been added to a financing package, but still was charged over several months for the guaranty. When the customer asked for it to be removed, Wells only promised to investigate.
"I feel I am being and have been scammed," the car buyer wrote to the CFPB. (Reporting by Dan Freed in New York; Additional reporting by Ross Kerber in Boston, Karen Freifeld in New York, and Lisa Lambert, Pete Schroeder, Sarah N. Lynch and Patrick Rucker in Washington; Writing by Lauren Tara LaCapra; Editing by Bernard Orr)