A federal judge in eastern North Carolina has ruled that a group of military service members must privately pursue claims over high credit card fees with Wells Fargo Bank, instead of proceeding with a class-action lawsuit.

The order, issued on Friday, recommended dismissal of the suit against the San Francisco-based banking giant, which has its largest employment base in Charlotte. U.S. Magistrate Judge Robert Jones Jr. ruled that credit card accounts opened before October 2017 are not protected by the Military Lending Act’s ban on mandatory arbitration.

The plaintiffs, who are current and former military members, claimed that Wells Fargo used predatory lending practices to target service members, according to the case filed in March 2024 in the Eastern District of North Carolina. These practices included charging high interest rates under the Servicemembers Civil Relief Act, imposing unlawful charges to inflate balances, and compounding interest.

Carmin Nowlin, Tamika Haley, and Jesus Rodriguez represented themselves and the proposed class, which included thousands of others. Their suit claimed that the bank broke several laws and agreements. Specifically, they alleged that the bank charged more than the legal 6% interest cap for service members, failed to forgive excess interest, and exceeded the Military Lending Act’s 36% annual interest rate limit.

The plaintiffs also alleged that Wells Fargo failed to provide important information to service members, broke promises made in its own Military Benefits Program, issued incorrect monthly statements, and lacked adequate systems to protect deployed service members’ accounts.

2017 cutoff exempts older accounts from federal protections

Judge Jones sided with Wells Fargo, ruling that the Military Lending Act did not protect these particular credit card accounts. The law began covering credit card accounts opened on or after Oct. 3, 2017. Since the plaintiffs opened their accounts between 2008 and 2015, the law’s protections did not apply to them.

The plaintiffs argued that each time they used their credit card, it should be covered by the Military Lending Act. However, the court disagreed, stating that the law only applies to when the account is first opened.

They also referenced a notice in their agreement regarding Military Lending Act protections, but the court found that this did not add any additional protection, as the law did not cover their older accounts.

The total claim for the proposed class members was more than $5 million, according to the suit, The Charlotte Observer previously reported.

Judge Jones decided that the plaintiffs’ issues must be handled in private arbitration, not in court, and dismissed the lawsuit. The parties have until Feb. 20 to object to this decision in writing.

Representatives for the plaintiffs were not available for comment as of Wednesday.

Wells Fargo is the fourth-largest bank in the U.S., with over $1.7 trillion in assets. Charlotte is Wells Fargo’s biggest employment hub, with about 27,000 workers among its 215,000 total employees.

In a statement to the Observer, the bank said, “Wells Fargo is committed to supporting military servicemembers and providing benefits and protections under the Servicemembers Civil Relief Act.”

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