Wells Fargo Improper Handling of PPP Applications Class Action

The Paycheck Protection Program (PPP) was intended to help businesses and workers get through the time of Covid-19 shutdowns by providing a “direct incentive for small businesses to keep their workers on the payroll” through loans funded through the Small Business Administration (SBA) and processed by ordinary financial institutions. The complaint for this class action alleges that applications for PPP loans were to be processed on a first come, first served basis, “Wells Fargo placed several roadblocks that prevented and/or prejudicially delayed” the applications of certain small businesses seeking loans under the program.

The Nationwide Class for this action is businesses and persons who contacted Wells Fargo to apply for PPP loans, and whose PPP applications were delayed or not processed by Wells Fargo in the order in which they were received in accordance with SBA regulations for the PPP. A California Subclass has also been defined.

The complaint outlines several things Wells Fargo allegedly did or required of applicants that may have interfered with their ability to obtain loans.

First, it required that applicants for PPP loans have a Well Fargo business checking account, even though this is not required by the program.

Second, it announced on or about April 5, 2020 that it would “focus” on providing help to businesses with fewer than fifty employees or to nonprofits. This is not a requirement or limitation of the program.

Third, the complaint claims that Wells Fargo did not process the applications on a first come, first served basis.

According to the complaint, the bank told applicants it would process their applications in a “queue based upon when” they’d told Wells Fargo of their “initial interest” in applying for a PPP loan and would work through the queue of applications in that order. Instead, the complaint says, the bank was “often prioritizing PPP Applications from customers seeking higher loan amounts or from otherwise preferred customers, and thereby left those who desperately needed the loans—America’s small businesses—out in the cold.”

The complaint says that Wells Fargo now says it will give to charity any fees that it was entitled to for originating PPP loans. However, the complaint points out that the damage has already been done: the PPP program “gave lenders such as Wells Fargo a chance to curry favor with larger or preferred business banking customers” and left many smaller businesses in financial straits. Also, “[u]pon information and belief, prioritizing certain customers may also have assisted Wells Fargo in avoiding significant unsecured loan losses.”

This is not the first time Wells Fargo has been accused of improper conduct. An article was quoted in the complaint as saying, “In February [2020], the bank was ordered to pay $3 billion to settle a fake account scandal…”

The complaint alleges fraud or deceit, negligent misrepresentation, and breach of fiduciary duty, among other things.

Article Type: Lawsuit
Topic: Government Programs or Benefits

Most Recent Case Event

Wells Fargo Improper Handling of PPP Applications Complaint

May 22, 2020

The Paycheck Protection Program (PPP) was intended to help businesses and workers get through the time of Covid-19 shutdowns by providing a “direct incentive for small businesses to keep their workers on the payroll” through loans funded through the Small Business Administration (SBA) and processed by ordinary financial institutions. The complaint for this class action alleges that applications for PPP loans were to be processed on a first come, first served basis, “Wells Fargo placed several roadblocks that prevented and/or prejudicially delayed” the applications of certain small businesses seeking loans under the program.

Wells Fargo Improper Handling of PPP Applications Complaint

Case Event History

Wells Fargo Improper Handling of PPP Applications Complaint

May 22, 2020

The Paycheck Protection Program (PPP) was intended to help businesses and workers get through the time of Covid-19 shutdowns by providing a “direct incentive for small businesses to keep their workers on the payroll” through loans funded through the Small Business Administration (SBA) and processed by ordinary financial institutions. The complaint for this class action alleges that applications for PPP loans were to be processed on a first come, first served basis, “Wells Fargo placed several roadblocks that prevented and/or prejudicially delayed” the applications of certain small businesses seeking loans under the program.

Wells Fargo Improper Handling of PPP Applications Complaint
Tags: Covid-19 Related, Unfair Business Practices, Your Bank