Wells Fargo Prioritized PPP Applications for Larger Loans Class Action

Wells Fargo has been a defendant in a number of class actions in recent years, with a wide variety of allegations. The complaint for this class action claims that Wells Fargo & Company and Wells Fargo Bank, NA violated the terms of the Paycheck Protection Program (PPP) by favoring certain customer applications over others, rather than processing them on a first come, first served basis.

The class for this action is all individuals and small businesses in the US that satisfied the criteria to receive a loan under the PPP and who timely applied for a PPP loans through Wells Fargo, but whose applications were not processed and/or who were not issued loans by Wells Fargo.

Small businesses have suffered enormously due to efforts to curb the spread of Covid-19. Congress instituted the PPP to help small businesses pay their employees and continue to survive. Banks and other lenders were to process applications and distribute funds. Lenders would receive a percentage of the loan amount as an origination fee.

Initially, Wells Fargo was barred from participating because of restrictions imposed by the Federal Reserve in relation to its former conduct. However, the bank petitioned for a “narrow and temporary” lifting of the restrictions so that it could participate in the program.

On April 5, 2020, Wells Fargo put out a press release announcing that it would be participating and that it would “focus on serving two segments of its customer population: nonprofits and small businesses with fewer than 50 employees.”

PPP applications were to be processed on a “first-come, first-served” basis. However, the complaint alleges that Wells Fargo knew that funds would soon run out, and it “prioritized larger companies asking for bigger loans” which increased the fees it would earn.

The complaint contains a table that it claims demonstrates that banks such as Wells Fargo “prioritized and front-loaded” applicants for larger loans in the first days of the program, only getting to most smaller customers when funds were running out.

The plaintiff for this class action, 2 Andy Enterprise Corporation, a Vietnamese fast-food restaurant which does business as Cuon—Vietnamese Street Food, put a PPP application in with Wells Fargo on April 15, 2020. The restaurant had sixteen employees and was asking for a loan of over $97,000.

Despite repeated attempts to contact Wells Fargo after that, the restaurant had difficulty getting to speak to a live person. On June 9, he received an e-mail asking for documents he had already submitted. Further contacts received no answer.

Eventually, when it was too late, he received a letter dated July 13, stating the purported reason Wells Fargo had denied him the loan: “When you applied for this application, you applied as a Sole Proprietor which requires different documentation.” However, the complaint claims this is not correct and that the application was designated as coming from an S-corporation.

Article Type: Lawsuit
Topic: Government Programs or Benefits

Most Recent Case Event

Wells Fargo Prioritized PPP Applications for Larger Loans Complaint

July 29, 2020

Wells Fargo has been a defendant in a number of class actions in recent years, with a wide variety of allegations. The complaint for this class action claims that Wells Fargo & Company and Wells Fargo Bank, NA violated the terms of the Paycheck Protection Program (PPP) by favoring certain customer applications over others, rather than processing them on a first come, first served basis.

Wells Fargo Prioritized PPP Applications for Larger Loans Complaint

Case Event History

Wells Fargo Prioritized PPP Applications for Larger Loans Complaint

July 29, 2020

Wells Fargo has been a defendant in a number of class actions in recent years, with a wide variety of allegations. The complaint for this class action claims that Wells Fargo & Company and Wells Fargo Bank, NA violated the terms of the Paycheck Protection Program (PPP) by favoring certain customer applications over others, rather than processing them on a first come, first served basis.

Wells Fargo Prioritized PPP Applications for Larger Loans Complaint
Tags: Covid-19 Related, Provisions of Government Programs