California sues Wells Fargo over 'predatory' rates
Friday January 10, 12:25 pm ET
SACRAMENTO, Calif., Jan 10 (Reuters) - California said on Friday it had sued a unit of San Francisco-based bank Wells Fargo & Co. Inc. (NYSE:WFC - News), accusing it of overcharging 15,000 customers with allegedly predatory interest rate loans.
California's Department of Corporations, which regulates financial services and consumer finance operations, said it is seeking civil penalties of up to $38.8 million to stop consumer finance lender Wells Fargo Financial California Inc. from allegedly overcharging its "instant loan check" customers and to void their overcharged loans.
The suit was filed in the Superior Court of Sacramento County. Wells Fargo was not immediately available to comment.
So-called instant loan checks resemble bank checks and are mailed to potential customers. Once they are endorsed and cashed, the person is bound by the terms of loan documents accompanying the check, the department said. The department said the unit was charging too much interest on the loans.
The department said it determined in 2001 that Wells Fargo Financial allegedly charged 15,000 of its customers predatory interest rates. After making over $533,000 in refunds, Wells Fargo turned around and overcharged many of the same consumers another $338,000 in 2002, the department alleged.
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