May 28, 2020 – Chase Bank Hit with Another Class Action Over PPP Agent Fees
Chase Bank faces another proposed class action over its alleged refusal to pay agents who assisted Paycheck Protection Program (PPP) applicants.
Filed by three CPA firms, the lawsuit claims Chase has, as a matter of policy, refused to pay agent fees despite the PPP’s clear regulations directing lenders to do so. According to the case, the bank’s conduct was a “deliberate scheme from the beginning” designed to help Chase evade its obligation to pay accountants, attorneys and other agents their due compensation.
The suit looks to represent anyone who, acting as an agent, assisted a client with preparing and submitting a PPP application to Chase Bank that resulted in a loan being funded under the program.
A proposed class action claims Academy Bank, N.A.; JP Morgan Chase Bank, N.A.; and MidFirst Bank have unlawfully refused to pay agents who assisted Paycheck Protection Program (PPP) loan applicants.
The lawsuit explains that the federal government implemented the Paycheck Protection Program (PPP) via the CARES Act as a means to provide relief to businesses struggling amid the COVID-19 crisis. Through the PPP, businesses could apply through private lenders for forgivable loans backed by the Small Business Administration (SBA). According to SBA regulations, private lenders and any agents who assisted PPP applicants with preparing or filing their applications were to receive fees from the SBA, directly or indirectly, in exchange for their services, the suit says.
Paycheck Protection Program lenders were to receive from the SBA a fee that ranged from one to five percent of the loan amount for each loan they processed, depending on the size of the loan, the lawsuit states. In turn, the case says, lenders were to pay agents—including attorneys, accountants, consultants, employees who assisted with an employer’s PPP applications, those who assisted lenders with handling SBA loans, loan brokers, and any other individual who represented an applicant in its business with the SBA—for their services through the fees they received from the SBA. Agent fees were to range between .25 and one percent of the loan amount, depending on the size of the loan, according to the suit.
According to the plaintiff, however, the defendants, despite the SBA’s clear guidance, have refused to pay agents for PPP services. In its work as an accounting firm, the plaintiff spent between two and 10 hours preparing and filing each PPP application for eight of the defendants’ customers and has received no payment from the banks despite having no other means of being paid for its services, the suit says.
“Defendants have either failed and refused to pay or are willing to pay only a partial percentage of the monies owed to Plaintiff and the Class,” the complaint states, adding that the banks have likely refused to pay any agents for the services they performed in connection with PPP applications.