J. Edwards Jewelry Distributing and its president John Silverman have been listed as plaintiffs in an attempted class-action lawsuit that targets Wells Fargo’s alleged use of hidden fees in its jewelry-financing program.
According to a complaint filed June 28 in San Francisco federal court, El Paso, Texas–based J. Edwards Jewelry Distributing was a participant in Wells Fargo’s Jewelry Advantage program. Similar Wells Fargo products exist for other industries, including for cars and home care, it says.
The complaint alleges that while retailers were not allowed to charge customers additional finance fees, they were encouraged to build the program’s fees into the cost of their products. This, it says, violates the 1968 Truth in Lending Act, as customers are told that their purchases are being financed for 60 months at 0 percent interest. “In reality, Wells Fargo’s financing scheme results in the creation of illegal hidden finance charges, and the imposition of double-digit interest rates on consumers,” charges the complaint.
The suit asserts that in many cases, retailers gave customers the option of “saving” money by paying in cash rather than signing up for the Wells Fargo credit card—as that means the store saves the money it would ordinarily pay to Wells Fargo.
It adds that, since the finance charge is typically built into the cost of the item, retailers often charge customers sales tax on the entire item, including their finance fees, even though stores are typically not allowed to charge sales tax on finance charges.
The suit, which seeks class-action status, charges that Wells Fargo might make as much as $800 million a year on what it calls “hidden finance charges.” It says that class members could number 5,000 merchants.
J. Edwards Jewelry Distributing and Wells Fargo could not be reached for comment. However, the San Francisco–based bank told Reuters that it does not comment on pending litigation.
(Image courtesy of Wells Fargo)