A proposed class action lawsuit filed in California on Sunday accuses Wells Fargo, Bank of America, Chase and and U.S. Bank of fraud and unfair business practices, among other claims, in the way the banks processed applications for the federal government's coronavirus relief program, the Paycheck Protection Program known as "PPP."
The program, which was supposed to offer a lifeline to the country's small businesses, has already come under fire for a chaotic roll-out. Now major banks set up to service the loans are accused of playing favorites, prioritizing lucrative loans for large businesses while re-shuffling the rules to benefit them. The lawsuits also allege the major banks collected some six billion dollars in processing fees.
"The PPP program was set up to benefit, small businesses on a first come first serve basis," plaintiff's attorney Dylan Ruga told NBC 5 Responds. "And what we've learned is that these banks, instead of processing the applications that they received on a first-come, first-served basis, reshuffled them and prioritized those with the highest loan amounts and those with their preferred relationships. Because doing so benefits the banks: the larger the loan amounts, the larger the origination fees, the more banks can earn."
We reached out to the named defendants to seek their responses.
*Wells Fargo says while it is declining comment on the lawsuit, the bank says it is working as quickly as possible to assist small business customer with the Paycheck Protection Program in compliance with the regulations and guidance provided by U.S. Treasury and the SBA.
*US Bank says it is aware of the class-action lawsuit filed and plans to vigorously defend ourselves as it is without merit. The cumulative industry data provided by the SBA is not reflective of U.S. Bank’s practices or results. US Bank says it continues to serve our small business customers and are prepared to process loans as quickly as possible should additional funds become available.
*Chase says it won’t comment on the lawsuit but insists it funded more than twice as many loans for smaller businesses than the rest of the firm’s clients combined. Chase says its intent was to serve as many clients as possible, not to prioritize any clients over others.
*Bank of America tells NBC 5 Responds it denies all allegations presented in the lawsuit.