More suits for you
Wells Fargo’s legal problems worsen
Another day, another class-action lawsuit against Wells Fargo.
The latest legal salvo claims the bank headed by Chief Executive Tim Sloan has been ripping off small businesses for years by burying fees and misleading merchants about how much they have to pay for credit card processing services.
Wells Fargo’s merchant services unit, a joint venture with First Data Corp., snookers small businesses with a confusing 63-page contract that contains “misleading statements about its fees and promises that it does not intend to keep,” the suit, filed by a Pennsylvania restaurant and a North Carolina tour guide company in Brooklyn federal court late Friday, alleges.
The merchant services unit charges businesses a percentage of sales every time a customer uses a credit card. The unit made more than $523 million last year, according to the suit.
Patti’s Pitas, a Middle Eastern restaurant outside Scranton, claims that it was “pounded by excessive fees” and shuttered in May, after only five months in business, according to the suit.
Among the “untrue” statements that Wells made to the restaurant was that there would be no monthly fees and no early termination fee.
But monthly fees ranged up to $50 and the restaurant was charged a $500 termination fee, the suit claims.
The suit comes as Wells Fargo is facing class-action suits for improperly opening more than two million accounts and charging auto loan customers for unneeded auto insurance.
On Friday, the bank also announced that it was likely to spend about $3.3 billion more than it had already reserved for legal fees — thanks to a widening probe of its fake accounts scandal.
The bank’s shares fell 30 cents on Monday, to $52.54.
“The accusations outlined against Wells Fargo in this lawsuit do not reflect how we operate our Merchant Services business,” Sara Hassell, a spokeswoman for the bank, said in a statement.
First Data didn’t immediately return an e-mail seeking comment.
CEO Tim Sloan of Wells Fargo, a.k.a. the bank of classaction lawsuits, doesn’t seem to be finding any answers to break the pattern of bad news.