Wells Fargo Accused Of Levying High Early Termination Fees

Per a lawsuit filed in U.S. District Court, Wells Fargo & Company’s (NYSE:WFC) merchant services division has been accused of charging small business with unacceptable fees for credit card transactions. Also, the bank has been alleged to have charged excessively high fees for early termination.

The lawsuit claims that the bank used a 63-pages long contract written in "deceptive language" in order to confuse the small business owners.

This time Wells Fargo Merchant Services has come under the limelight, which is a joint venture between Wells Fargo and First Data Corporation (NYSE:FDC) .

CNNMoney cited a former employee of the bank’s Merchant Services division, who claimed to have been instructed to target small business with no legal support. He disclosed that during his two-year tenure at the bank, it was impossible for the owners to exit the agreement.

Among the plaintiffs, Queen City Tours claimed that the bank charged it monthly fees of $20 to $35 for not being able to conduct minimum number of transactions, when it was specified in the contract that there would be no such fees. Further, the tour company also accused the bank of levying an early termination fees of about $500.

Another plaintiff, Patti's Pitas, a Pennsylvania-based restaurant, claimed that is was charged very high fees when it went out of business. Wells Fargo argued that Patti's Pitas could not break the three-year term of the contract. However, the restaurant owner was not aware of the term.

Wells Fargo, however, denied all allegations. Further, the bank believes that the negotiated pricing terms were fair and had been administered well.

Stocks to Consider

A couple of stocks in the same space worth considering are Carolina Financial Corporation (NASDAQ:CARO) and The Bank of New York Mellon Corporation (NYSE:BK) .

Carolina Financial witnessed an upward earnings estimate revision of 4.5% for the current year, over the last 30 days. Its share price has increased 51.8% in the past year.

BNY Mellon’s Zacks Consensus Estimate for current-year earnings have been revised nearly 1% upward in the last 30 days. The company’s share price has increased almost 30% in a year.

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