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Wells Fargo Enterprise Sued for Overbilling Merchants

Embattled Bank Allegedly Assessed Merchants Unauthorized Credit Card Fees
Wells Fargo
Wells Fargo in Spotswood Dave Schatz

NEW YORK, NY–A Wells Fargo Bank partner that provides credit card processing services to merchants nationwide has been served with a lawsuit over the use of misleading sales tactics and overbilling for services, according to Reuters News Service.

The commercial enterprise, Wells Fargo Merchant Services, promised merchants it would offer transparent pricing, but instead charged unauthorized fees disguised with deceptive language in monthly statements, according to the report outlining the pending class action.

The suit was filed on August 1 in Brooklyn federal court by Queen City Tours of Charlotte, North Carolina, and Patti's Pitas, a shuttered restaurant in Pennsylvania, as well as other merchants nationwide, according to Reuters.

Offering background, the report notes that First Data Corporation and Wells Fargo Bank formed a joint venture to create Wells Fargo Merchant Services, a service that processes credit and debit card purchases for businesses. It adds that hundreds of thousands of merchants were likely affected by the lawsuit.

"Promises were made by aggressive sales tactics and then broken," Adam Webb, a lawyer representing the merchants, told Reuters, adding they took place some six years ago.

"We have been notified of this lawsuit and are currently in the process of evaluating it," Wells Fargo spokeswoman Sara Hassell told Reuters.

First Data spokesman Mark Murphy declined to comment to Reuters.

According to the lawsuit, Wells Fargo Merchant Services imposed unauthorized, surprise fees on merchants.

For instance, a $35 monthly minimum charge, after they signed three-year contracts could only be terminated by paying a $500 penalty, according to the report.

“Wells Fargo buried some terms in a 63-page, fine-print guide that could never be read in its entirety or understood by a busy merchant, the lawsuit said,” writes Reuters.

“Statements sent to merchants described some fees as ‘interchange charges,’ indicating they were imposed by a credit card network, when in reality Wells Fargo Merchant Services kept part of those fees as profit,” writes Reuters, citing court papers.

Wells Fargo has been dealing with a nationwide scandal over unauthorized accounts opened by employees working in its consumer banking division and widespread sales practices involving numerous lawsuits.

The scandal spanned as long as a decade and a half and reportedly included pandering to undocumented immigrants so that they’d be more likely to open new bank accounts.

Wells Fargo is the third-largest U.S. bank, but in 2016 it agreed to pay a $185 million fine to the U.S. government to settle claims over the unauthorized accounts.

The case has been filed with the U.S. District Court for the Eastern District of New York, and was assigned docket number 17-cv-4583.