SAN FRANCISCO (CN) - A federal class action claims Wells Fargo charged interest on thousands of student loans when it was prohibited from doing so. Lead plaintiff Sharon Cheslow claims Wells Fargo capitalized interest on consolidated student loans she was repaying, and of federal Stafford loans that were in deferment while she was in college.
The promissory notes she signed stated that Wells Fargo was not allowed to capitalize interest on loans in repayment or in deferment, according to the complaint. Cheslow says Wells Fargo has added more than $1,000 to her principal loan balance so far. It also neglected to provide her with 30 days notice regarding the capitalization of interest on her Stafford loan, she says.
The class claims that Wells Fargo intended to violate the terms of the notes.
Cheslow says she contacted the lender in October 2009 with questions about the interest capitalization on her accounts and a customer service representative told her that this "was not a practice peculiar to her, but reflected Wells Fargo's general practice."
She demands an injunction and class restitution and statutory and punitive damages for violations of the Consumer Legal Remedies Act, the California False Advertising Law and unfair competition. The class is represented by Roberta Steele with Goldstein Demchak of Oakland.
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