Class action filed against Wells Fargo Merchant Services

A class action lawsuit filed Aug. 4, 2017, against Wells Fargo & Co.’s merchant services division is the latest in a series of grievances against the company. Plaintiffs in Patti’s Pitas LLC and Queen City Tours v. Wells Fargo Merchant Services LLC accuse the bank of coercive sales tactics and hidden fees. The prosecution claims Wells Fargo misstated fee policies, even after restructuring its card processing division in response to customer complaints.

“As has become obvious in recent months, Wells Fargo had a corporate culture which emphasized revenue and profit over customer wellbeing,” stated Adam Webb Esq. of Atlanta-based Webb, Klase & Lemond LLC. “In April of 2017, internal reports surfaced that confirmed that this culture had infected the Merchant Services division. We have seen evidence of this through the experiences of our clients, who have learned the hard way that profit trumps promises at Wells Fargo.”

Broken promises

Queen City Tours and Patti’s Pitas, both customers of Wells Fargo Bank, claimed they were not advised of three-year contract terms or $500 early termination fees; they also allege the defendant failed to honor contractual fee structures. Following is a partial list of complaints:

• Monthly minimums: Queen City claims it negotiated zero monthly minimums for its seasonal business, terms that were spelled out in the contract. However, a separate pricing disclosure enabled the defendant to calculate and charge a “Monthly Service Fee” of $35 for each inactive 30-day period. This charge was subsequently lowered to $20 after Queen City complained.

• Statement billing fees: Queen City claimed its requests for electronic merchant statements went unheeded, resulting in a continuous upcharge of $10 per month for paper statements.

• PCI compliance fees: Queen City alleged it was inappropriately charged a $25 monthly Payment Card Industry (PCI) Data Security Standard) noncompliance fee, intended for “Level 4 Clients who utilize a gateway or value added reseller (VAR),” neither of which applied to Queen City.

• Post-cancellation assessments: When Queen City switched processors, the defendant imposed a $500 early termination fee and additional monthly minimum fee of $20 on the merchant until the purported term of the contact ended. “It was only after the Consumer Financial Protection Bureau … notified Defendant about Queen City’s complaint that Defendant agreed to refund a few fees and close the account without the $500 early termination fee,” court documents stated. When the CFPB intervened on behalf of Patti’s Pitas, Wells Fargo agreed to close the account without further charges or termination fees, representatives stated.

• Bill-back fees: Patti’s Pitas alleged that its merchant statements contained dozens of fees carried over from a previous month, making it nearly impossible to determine its true effective rate. Plaintiffs allege these bill-back schemes are designed to appear as legitimate interchange fees but instead hide mark-ups and fees that go directly to the defendant’s bottom line. “Both Patti’s Pitas and Queen City were victimized by this practice,” representatives stated.

Rebuilding the brand

On March 28, 2017, Wells Fargo & Co. reached a $110 million settlement on Jabbari v. Wells Fargo N.A., et al., a 2015 class action lawsuit brought against the bank for fraudulent sales practices that created 2 million unauthorized consumer bank and credit card accounts. The bank faces additional legal actions from consumer advocacy groups, including the National Consumer League, Consumers for Auto Reliability and Safety Foundation, and Neighborhood Assistance Corp. of America, for unfair banking and lending practices. “Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us, is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request,” stated Wells Fargo Chief Executive Officer Tim Sloan.

Wells Fargo is working on rebuilding its brand. It refunded $2.6 million in fees following a review of banking deposit and credit card accounts, with refunds averaging $25. It has terminated managers and employees and created incentive programs that tie employee performance to customer satisfaction, loyalty and ethics. New customers receive confirming emails within one hour of opening a deposit account, as well as acknowledgement and decision status letters after applying for a credit card, Sloan noted.

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