Wells Fargo flop
Wells Fargo’s reputation took another hit this week when small business owners filed a class action suit at a New York federal court.
The small businesses claim that they were misled and overcharged by Wells Fargo’s Merchant Business Services.
The suit calls Merchant Business Services an “overbilling scheme” that was “designed to deceive customers.” Filing the suit are Queen City Tours of North Carolina and Patti’s Pitas, a restaurant in Pennsylvania.
Touring company Queen City Tours opened a contract with Wells Fargo’s Merchant Business Services in October of 2015. Because it is a seasonal touring company that does little to no business during certain months of the year, Queen City negotiated with Wells Fargo that their contract would not include minimum monthly charges.
Nonetheless, Queen City claims that Wells Fargo continued to penalize them for failing to meet monthly minimums.
Queen City also says that they were charged a monthly billing fee, even though they had opted for electronic billing, which was supposed to exempt them from the charge.
The other company, Patti’s Pitas, alleges that Wells Fargo attempted to “confound and confuse” them by using a “back-billing” system to charge them high fees for credit card transaction in previous months.
Both companies say that they were entrapped by Wells Fargo’s exorbitant termination fees. Patti’s Pitas says they were continuously charged even after going out of business. Queen City Tours, fed up with the sneaky fees, attempted to terminate their contract with Wells Fargo and were told they would be charged $500.
The suit also complains that the 63-page long Business Services application contained “voluminous legalese that could not possibly be read in its entirety or understood.”
Also that the fine print contained provision allowing Wells Fargo “to charge whatever it wants even if such fees and rates are vastly different and higher than those that are clearly set forth in the application.”
Wells Fargo denies the allegations, telling Consumerist that their fees are “fair and administered appropriately.”
The bank is still recovering from last fall’s revelation that, under pressure to meet demanding sales goals, employees opened millions of fake accounts.
That scandal led to the resignation of CEO and Chairman John Stumpf. His unpopular replacement, Stephen Sanger, was narrowly elected at a heated shareholders meeting in April. Experts predict that Sanger will likely be ousted in an upcoming board shake-up.