Wells Fargo faces a lawsuit alleging the lender concealed overcharges on credit card interest rates and fees for U.S. service members and their families.
The complaint, lodged March 20 in U.S. District Court for the Eastern District of North Carolina, claims that Wells Fargo failed to adhere to the provisions of the Servicemembers Civil Relief Act.
The act mandates that loan debts be capped at a 6% interest rate after soldiers are deployed for active duty. Furthermore, the suit asserts the bank neglected its obligation under the SCRA to forgive any interest accrued above the 6% threshold. Additionally, the lawsuit cites alleged violations of the Credit Card Accountability Responsibility and Disclosure Act.
“Wells Fargo is committed to supporting all military servicemembers and providing the benefits and protections required by the Servicemembers Civil Relief Act (SCRA). We are still reviewing the details of this complaint,” the bank said in a statement to Banking Dive.
Wells Fargo projected itself as an institution working for military members, veterans and their families, according to the lawsuit seen by The Charlotte Observer. However, the San Francisco-based lender upped the principal balance amounts owed on credit cards and imposed compound interest rates on the balances, the plaintiffs claimed in the lawsuit.
The lawsuit alleges Wells Fargo hid the overcharges until 2022, when it was discovered the bank had sent misleading correspondence and payments to some military families.
The attorneys said in the lawsuit that Wells Fargo “continued the nationwide practice of overcharging active military servicemembers for more than a decade.”
Attorneys seek class-action certification for the lawsuit.
The total claim exceeds $5 million for proposed class members and includes military members who received reduced interest and fee benefits from the lender on or after Jan. 1, 2006. The plaintiffs claimed that Wells Fargo violated the Truth in Lending Act — a rule that requires lenders to communicate all information about charges and fees related to loans to their customers. Wells Fargo also failed to adhere to the Military Lending Act, which provides special protections for active duty service members, the complaint said.
Earlier this month, Wells Fargo was sued for failing to do enough to reimburse customers affected by its 2016 fake-accounts scandal. The proposed class action claimed the bank sent vague and confusing letters to the customers urging them to contact the bank if they were unknowingly enrolled in unwanted products. The plaintiffs argued that the bank hoped the customers would disregard the letters rather than realize they made valid claims.
However, the Office of the Comptroller of the Currency in January terminated a consent order related to the 2016 scandal, saying the agency “believes that the safety and soundness of the Bank and its compliance with laws and regulations does not require the continued existence of the Order.”
Wells Fargo agreed to pay $35 million last August to settle allegations from the Securities and Exchange Commission that it overcharged more than 10,900 investment advisory account holders by about $26.8 million in fees.
