Wells Fargo is facing a lawsuit for allegedly breaking the Paycheck Protection Program (PPP) rules as the initial agreement was a first-come, first-served basis. The suit is by a small company from California, and it is not the first time that Wells Fargo is getting accusations for professional misconduct.
The last time the case was about the creation of fake bank accounts so that the company could gain overdraft fees by posting debit card charges (Rizzi, 2020). The lawsuit accuses Wells Fargo of misappropriation of PPP loans in favor of big businesses. Yet, it was meant for smaller business to gain more commission, meaning more profit.
The grounds of the lawsuit stemming from the allegations that many companies receiving the PPP loans were given based on pretenses and mistakes. PPP is a part of the CARES act exclusively by the federal government. In the beginning, Wells Fargo was not eligible for the project because of the previous scandal above (Rizzi, 2020).
However, because of the high demand for the loan, Wells Fargo was later listed temporarily and under strict restrictions so that the loans could reach small businesses fast. Wells Fargo was then allowed to disburse up to 10 billion dollars. Wells Fargo then committed to focusing on small businesses and non-profit ones.
However, Wells Fargo intentionally rigged the rules for disbursement of the loan, which was to be on a first-come-first-served basis according to the lawsuits. Allegedly, Wells Fargo focused on companies applying for bigger loans so that they could gain more profits on processing fees. The PPP loans are fully guaranteed by the federal government and the Small Business Administration, and it presents a massive opportunity for the defendant to develop.
The lawsuit states that Wells Fargo broke its promise of prioritizing small businesses with less than 50 employees when applying for the disbursement program. Wells Fargo, however, served businesses with previous lending relationships instead of small companies vouching for the loans as part of the Covid-19 pandemic cushion (Rizzi, 2020).
The lawsuit states that Wells Fargo gave out bigger loans to favored entities to do minimum work and to gain the most profits in commissions. Wells Fargo is not the first company to be served with the same type of lawsuit, and it does not help the company's reputation.
Wells Fargo is one of the leading companies facing a class-action lawsuit by preventing access to PPP loans to small businesses. They instead gave it to larger businesses so that they could do less work and earn high commission. It is against the CARES act and the regulations by the Small Business administration to use a first-come-first-served basis and the priority of small businesses with less than 500 employees. The plaintiff accuses Wells Fargo of not processing their requests as they could have applied in other banks if they were aware of the situation at the financial organization. The plaintiff is, therefore, seeking compensation as they invested in the application by paying loan brokers, consultants, attorneys, and CPAs.
Granja, J., Makridis, C., Yannelis, C., & Zwick, E. (2020). Did the paycheck protection program hit the target? https://doi.org/10.3386/w27095
Rizzi, C. (2020). Wells Fargo facing another class action over alleged manipulation of fed. Paycheck protection program. ClassAction.org | Join Class Action Lawsuits | Know Your Rights. https://www.classaction.org/news/wells-fargo-facing-another-class-action-over-alleged-manipulation-of-fed.-paycheck-protection-program
Thuronyi, V. (2020). COVID-19 and Fiscal Policies: The Paycheck Protection Programme: A Tax Expenditure in Reverse? Intertax, 48(8), 787-789. https://kluwerlawonline.com/JournalArticle/Intertax/48.8/TAXI2020076
Cite this page
Essay Sample: Lawsuit Against Wells Fargo. (2023, Oct 31). Retrieved from https://speedypaper.com/essays/essay-sample-lawsuit-against-wells-fargo
If you are the original author of this essay and no longer wish to have it published on the SpeedyPaper website, please click below to request its removal:
- Project Failure Cases- Free Essay in Project Management
- Free Essay Example on Gun Control in the US
- Law Essay Example: Compare UK Courts and DIFC Courts
- Research Paper Sample on Gambino Family Case
- Financial Task Essay Sample
- Legitimate Profiling Assessments - Paper Example
- Essay Sample on Rationalizing Crime: An Economic Perspective on Bank Robberies and Societal Implications