Banking

‘Squeezing blood from a turnip’: Charlotte businessman sues Wells Fargo

Customers use a Wells Fargo automated teller machine at a Miami branch in this September 2016 photo.
Customers use a Wells Fargo automated teller machine at a Miami branch in this September 2016 photo. Getty Images

Wells Fargo for years has operated an “overbilling scheme” involving debit and credit card payment processing that has enriched the bank at the expense of small businesses, a Charlotte businessman alleges in a lawsuit filed Friday in federal court.

Queen City Tours, along with a former Pennsylvania restaurant, claim in a proposed class-action complaint that Wells Fargo promises straightforward, transparent pricing, only to increase agreed-upon fees and engage in other improper practices. The plaintiffs say hundreds of thousands of businesses have been harmed by the conduct of Wells Fargo Merchant Services, whose tactics include imposing “new junk fees” and “pass through” costs after contracts are signed.

“Defendant usually gets away with its scheme by using techniques to prevent customers from noticing and taking action,” the suit says. “Even if customers learn they are being ripped off, they are still not able to escape because defendant imposes massive early termination fees.”

In a statement, Wells Fargo said it has been notified of the suit, filed in federal court in New York, and is in the process of evaluating it.

Queen City Tours was never informed it would be stuck in a contract for three years or that it would have to pay a $500 early termination fee when it inquired about credit card processing services in 2015, according to the suit. Company owner Juan Whipple, who founded the business in Charlotte in 1993, told the Observer Friday he also became frustrated by what he felt were excessive fees.

“There was a $10 fee if you don’t check this email. You got to be kidding,” said Whipple, a former Army paratrooper who moved his business to Miami in 2015 though he still lives in Charlotte about half the year. “Greed, it’s what it all boils down to and squeezing blood from a turnip, and I was the turnip.”

Whipple said Wells finally agreed to release him from his contract without paying a termination fee once he complained to the federal Consumer Financial Protection Bureau in March.

Friday’s suit follows media reports in April about Wells Fargo Merchant Services, including claims small firms had been pushed into pricey contracts they didn’t understand. The Wall Street Journal, citing current managers, reported that Wells fired at least two dozen employees over the past two years and took other actions in response to such bank-policy violations.

The latest suit also adds to the litigation that has piled up against Wells Fargo since last September’s revelations that employees opened more than 2 million accounts that may not have been authorized by consumers to meet sales goals. On Friday, Wells disclosed that a review of its sales practices is expected to identify a “significant increase” in the amount of potentially unauthorized accounts, a new blow to the bank.

Pointing to that scandal, Friday’s lawsuit says Wells Fargo Merchant Services was “also infected” by improper business practices.

Deon Roberts: 704-358-5248, @DeonERoberts

  Comments