Charlotte tour company sues Wells Fargo joint venture over merchant credit card fees

FILE PHOTO: A Wells Fargo Bank is shown in Charlotte, North Carolina, on September 26, 2016. REUTERS/Mike Blake

NEW YORK (Reuters) — A Wells Fargo Bank joint venture that provides credit card processing services to merchants across the country has been hit with a lawsuit accusing it of using misleading sales tactics and overbilling for its services.

Filed on Friday in Brooklyn federal court, the proposed class action said Wells Fargo Merchant Services promised merchants that it would give them transparent pricing but charged them unauthorized fees and disguised the fees with deceptive language in monthly statements.

A joint venture between Wells Fargo Bank and payment processor First Data Corp, Wells Fargo Merchant Services helps process credit and debit card purchases for businesses.

The lawsuit was filed on behalf of tour operator Queen City Tours in Charlotte, North Carolina, defunct Pennsylvania restaurant Patti’s Pitas, and other merchants across the country who say they were charged unauthorized fees by Wells Fargo Merchant Services. Hundreds of thousands of merchants were likely affected, the lawsuit said.

“Promises were made by aggressive sales tactics and then broken,” said Adam Webb, a lawyer for the merchants. The conduct goes back about six years, he said.

“We have been notified of this lawsuit and are currently in the process of evaluating it,” Wells Fargo spokeswoman Sara Hassell said.

First Data spokesman Mark Murphy declined to comment.

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

The third-largest U.S. bank last year agreed to pay a $185 million fine to the U.S. government to settle claims about the unauthorized accounts. On Friday, it said it would pay the government $108 million to settle allegations that it charged military veterans hidden fees to refinance mortgages.

The lawsuit regarding cards said Wells Fargo Merchant Services hit merchants with unanticipated or unauthorized fees, such as a $35 monthly minimum charge, after they signed three-year contracts that could be terminated only by paying a $500 penalty.

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.

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, the lawsuit said.

The case is Patti’s Pitas et al v Wells Fargo Merchant Services, U.S. District Court, Eastern District of New York, No 17-cv-4583

Reporting By Dena Aubin; Editing by Alexia Garamfalvi and Frances Kerry for Reuters.

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