A putative class action lawsuit has been filed in Miami accusing Wells Fargo Bank of giving kickbacks to business associates for referrals, media reports said.
The suit contends that San Francisco-based Wells Fargo set up contests called “Pick of the Pros” and “Play of the Week” to pay back business associates for referrals, the South Florida Daily Business Review reported.
The suit claims that this arrangement violates the Real Estate Settlement Procedures Act, reports said.
Responding to questions about the suit, Wells Fargo said in a statement that it has not been contacted about a class-action lawsuit, “nor to its knowledge is it being investigated by HUD regarding the Play of the Week program.”
Kickbacks in the real estate industry have taken center stage this year, sparked by a Colorado inquiry into title insurance practices. In late September, Prudential Locations LLC agreed to pay $48,000 to settle a U.S. Department of Housing and Urban Development investigation into alleged kickbacks. Other real estate settlement services providers have entered into similar agreements.
Lead plaintiffs in the suit, Donna and Diego Gomez, spent almost $300,000 for a Miami condo earlier this year, paying $2,200 in loan fees to Wells Fargo Bank, the suit alleges. The couple contends that this was an overpayment related to alleged kickbacks in a lawsuit they filed Friday in Miami-Dade Circuit Court seeking class action status, reports said. The couple does not contend that the fees were undisclosed to them, the Review reported.
“The issue is that money that went for this referral program, which we refer to as a kickback prize program, should have gone to lower their fees,” the couple’s attorney, Jeremy Friedman of Downs Brill Whitehead & Sage in Coral Gables, Fla., told the Review
According to the Review, the couple paid $287,405 for a one-bedroom condo in the Club at Brickell Bay at 1200 Brickell Bay Drive in Miami. Wells Fargo financed $229,924 of the purchase price at an interest rate of 5.375 percent, the Review reported.After the couple closed on their condo purchase, Diego Gomez consulted with Friedman, who allegedly discovered that Wells Fargo, through Gage Marketing, conducted national incentives contests for real estate salespeople, builders’ employees, accountants and attorneys, the Review reported.
The winners allegedly got prizes ranging from DVD players and color TVs to trips to Hawaii and $25,000 cash, the Review reported.
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