Wells Fargo Sued for Overcharging Military Members

They might market themselves as a bank that serves servicemembers, but Wells Fargo is being accused of violating their word and federal law in a new lawsuit saying they charge servicemembers and their families excessive interest rates and fees.

The bank’s actions, the lawsuit alleges, are both negligent and illegal and have caused damage to thousands of military families through misconduct. 

A law to protect servicemembers

According to the proposed class action lawsuit, Wells Fargo has violated the Servicemembers Civil Relief Act (SCRA), which guarantees that servicemembers debt is reduced to a six percent interest rate while they are on active-duty, that interest above six percent is permanently forgiven, and that bak fees are waived. Wells Fargo did the opposite, as well as concealing overcharges, the lawsuit alleges.

“These violations caused damage to servicemembers, including the miscalculation of principal, interest, payoff amounts, and improper imposition of interest, fees, and other charges,” the lawsuit says, adding that the bank does not keep adequate internal systems to ensure compliance with the law and has violated the law for more than a decade.

A rep from the bank told WCNC Charlotte: "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 investigation

The lawsuit says that plaintiffs in the case didn’t discover Wells Fargo alleged misconduct until a 2022 internal audit, which led to an investigation that uncovered “wholesale violations” of the SCRA and the bank's own military benefits program that were systemic and repeated.

Despite the evidence, the bank didn’t provide the families with any accounting of the alleged overcharges nor did it admit wrongdoing, the lawsuit alleges. “Instead, on information and belief, defendant sent unsolicited refunds for overcharges,” the class action says.

Fake benefits

As per the SCRA, all banks are required to abide by certain rules pertaining to servicemembers, vets, and their families, which allows the families to focus on their deployment rather than their finances, the Consumer Financial Protection Bureau states. 

Wells Fargo has achieved a large customer base of military families due to a benefits program it advertises as going above and beyond what is required by law. It also has exclusive agreements with a number of military bases to be the only bank on that base. 

However, this isn’t the first time it has been accused, or found guilty, of violating the SCRA. In 2016, Wells Fargo was admonished by the Office of the Comptroller of the Currency with a $20 million civil money penalty as well as being ordered to pay $4 million in restitution to servicemembers after it was found guilty of violations of the act. 

Between 2006 and 2016, Wells Fargo failed to provide the 6 percent interest rate, failed to accurately disclose servicemembers’ active duty status to the court via affidavits prior to evicting those servicemembers,  and failed to obtain court orders prior to repossessing servicemembers’ automobiles, the office found. 

Another scandal

More recently, Wells Fargo was making headlines again, this time for the fake accounts scandal which saw the Justice Department order the bank to pay $3 billion. According to the department, between 2002 and 2016 the bank pressured employees to meet unrealistic sales goals “that led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent, often by creating false records or misusing customers’ identities.”

In February, Wells Fargo was hit with a new proposed class action lawsuit accusing it of not doing enough to help customers who were harmed through the fake accounts scandal, Reuters reported. New Mexico school teacher Amanda Gonzales said the bank left all the impetus on resolving issues to customers, and it shifted the burden "to avoid, reduce, and delay its ultimate liability and sweep under the rug its long-standing, intentional misconduct.”

In the current proposed class action lawsuit, the plaintiffs are seeking damages, interest, restitution, the establishment of a trust, accounting, and injunctive relief. 

The plaintiff and proposed class are represented by Paul J. Puryear, Jr., Matthew D. Ballew, and Robert E. Zaytoun of Zaytoun & Ballew, PLLC; and Knoll D. Lowney, Claire Tonry, Marc Zemel, and Alyssa Koepfgen, of Smith & Lowney, PLLC

The Wells Fargo SCRA proposed class action lawsuit is Nowlin et al v. Wells Fargo Bank, N.A., Case No. 5:24-Cv-00179, in the U.S.District Court for the Eastern District of North Carolina.