Wells Fargo makes headlines once again for treating its customers poorly. CNNMoney reports how the bank has used its Merchant Services division to overcharge small businesses for credit card transactions using their services, charging those same businesses “massive early termination fees” if they attempted to leave.
In a lawsuit filed in US District Court on August 4 claims, this scheme, which took place over the span of several years, deliberately targeted small businesses and inexperienced business owners by using complicated language in its large contracts, specifically intending to force them into agreements that were not beneficial or ethical. The case’s lawyer has already filed documents with the court to make this a class action suit due to the large number of people Wells Fargo has taken advantage of.
According to a former employee of Wells Fargo Merchant Services, he and his colleagues were specifically instructed by their employer to target small businesses for this kind of manipulation. “We used to be told to go out and club the baby seals: mom-pop-shops that had no legal support,” he said in an anonymous interview with CNNMoney. He also confirmed that it was nearly impossible for these businesses to successfully leave their agreements, comparing it to “a shady used car deal.”
Some of the poor business practices of Merchant Services are outlined in the case. For example, North Carolina-based Queen City Tours was hit with monthly fees for failing to maintain a minimum number of business transactions, despite the owner, veteran Juan Whipple, claiming that he was assured there would be no such fees when he joined with the service.
Both Wells Fargo and First Data, the two companies that make up Wells Fargo Merchant Services, have declines to make statements to media outlets with regards to what their former employee has claimed at this time. Wells Fargo has released a statement referring to the case, saying, “We deny these claims and intend to defend against them.” The company also believes that its “negotiated pricing terms are fair and were administrated appropriately.”
This is not the first time in recent history Wells Fargo has been under fire for shady business practices. These overcharging scams are only the latest in a long history of black marks for the bank, following last year’s racial discrimination allegations and bank and credit card scams. Even as early as last month, the bank was again in the headlines for charging over 570,000 people for car insurance they didn’t need, leading to many having their vehicles repossessed.
There are no dates currently as to when this case could go to trial.