Bank of America is being sued by specific three small businesses alleging the financial services company misled several participants regarding the requirements of the loan leaving them with unforeseen debt.
The bank is put on the court’s observation after the Feb. 22 case alleging violations of federal consumer law.
The plaintiffs including Tycko & Zavareei LLP, Kelley Uustal LLC, and McCune Law Group filed a complaint against the banking behemoth on behalf of various small businesses such as Brandamize, LLC, Happy Puppy LA Inc., and Aurora Investment Services Inc.
The class action complaint arose as a result of the alleged misinterpretations that dealt with the Paycheck Protection Program Loans, intentionally making the small business owners take out what they believed were forgivable loans only to realize they were unforgivable.
The complaint detailed that the Bank of America wrongly advertised the livelihood-saving loans as forgivable as far as they are used according to the given terms.
However, when the customers complied with the stated terms and applied for forgiveness, they were told that they were misled by the Bank of America, as they failed to provide their customers with correct information regarding their application, which ultimately led to the ineligibility of forgiveness.
The filing refers to the government’s 2020 Paycheck Protection Program which was formulated to deliver forgivable loans to qualified businesses based on certain eligibility criteria. The conditions included the loan must be used to strictly cover “eligible payroll” costs.
The major intention of the government behind the PPP was that they needed sole proprietors, self-employed workers, tribal businesses, and certain non-profit organizations to stay open even during the worst months of the world pandemic.
With a properly structured idea, the government partnered with several banks including the Bank of America. Neither such bank was offering any free service as they were all guaranteed a processing fee based on the amount of loan they issue.
The lawsuit clearly states that starting from 1% of the loan amount on every $2 million or even more commission on smaller loans were offered to the banks.
According to the plaintiffs, banks were apparently incentivized per each PPP loan they issue and their actions were such that the loans were meant to be forgiven, although it was not.
Several banks believed they were not responsible regarding whether a loan would be returned or not, as they were apparently said to be forgivable loans.
Among all the other banks, the most prolific Bank of America was ranked second as the largest private originator of PPP loans, generating approximately $34 billion in loans ever since the Donald Trump administration in 2020 announced the strategy via the Economic Security Act, worth $953 billion.
In order to make the deal lucrative, the Bank of America BoA marketed the program in a deceptive way that misled many small business owners.
For instance, the Bank of America was well aware that the government would only approve Paycheck Protection Program to businesses that used the amount to pay retained employees.
However, they hid the fact that the program didn’t support any payment made to the 1099 employees, which caused financial destruction.
So, as per the lawsuit, many small business owners have “since discovered the hard way.” Indeed, they were also persuaded to take extra loan amounts which neither was unforgivable, stated the lawsuit.
Through the misleading path it opted, millions were conceived to take loans more than what they required, despite knowing that the Bank of America was taking advantage of their desperate situation to save their business.
Must Read:- NFL Films Faces Lawsuit After Maintaining Database Of Raunchy Cheerleaders Footage
However, the only reason they agreed to consider the loans was that they were forgivable when in reality they were being tricked by the massive marketers.
After realizing the bitter truth, the plaintiffs are standing on behalf of any Californian business that was pushed to take a PPP loan from the Bank of America.
They are also supporting any California-based business that received a PPP loan from BoA and was denied its benefits because they used the amount to pay the 1099 employees.
But what is noteworthy here is that neither of the above-mentioned businesses was informed about the eligibility condition that only enabled them to pay the retained employees.
The Bank of America is further being sued for negligent misinterpretation, which resulted in the damage of billions.
Currently, the Bank of America is attempting to recover the sumptuous amount that was lost by the businesses as a result of its carelessness.
Read More:- Biggest Takeaways From The Goldman Sachs Investor Day 2023
