SAN FRANCISCO–Add to the long list of offenses Wells Fargo has either admitted to committing or has been alleged to have done–overcharging small businesses for processing credit card transactions.
A lawsuit has been filed that alleges that small business owners who tried to leave Wells Fargo were charged "massive early termination fees," according to the lawsuit filed in U.S. District Court.
The "overbilling scheme" targeted less sophisticated businesses by using "deceptive language" in a 63-page contract designed to confuse them, the lawsuit filed on Aug. 4 claims. The lawyer filed court documents to seek class action status, CNNMoney reported.
The lawsuit centers on Wells Fargo Merchant Services, a joint venture that is 60% owned by Wells Fargo and 40% controlled by First Data (FDC).
CNN Money quoted a former employee of Wells Fargo as saying he was instructed to target these small businesses.
"We used to be told to go out and club the baby seals: mom-pop-shops that had no legal support," the former employee was quoted by CNNMoney as saying. The person previously worked with Wells Fargo Merchant Services.
The former Wells Fargo employee told CNNMoney that when he worked there, from 2011 to 2013, it was nearly impossible for business owners to leave the merchant agreement. "God would have had a hard time" escaping the contract, he said. "It really was like a shady used car deal."
One of the plaintiffs in the suit, Queen City Tours in North Carolina, claims it was assessed a $500 early termination fee after trying to leave Wells Fargo Merchant Services, and that it was charged monthly fees of $20 to $35 for failing to have a minimum number of transactions.
Wells Fargo has recently acknowledged that the fake-account scandal for which it paid $185 million in fines may be larger than the two-million accounts thought to be involved; that it charged more than 800,000 customers for insurance they did not need; that it extended the terms of mortgages and raised costs for customers who were in bankruptcy, and with violations of Financial Industry Regulatory Authority’s (FINRA) rules covering the sale of securities