(Adds comment from Wells Fargo)
NEW YORK, Aug 7 (Reuters) - A Wells Fargo Bank joint venture that provides credit card processing services to merchants across the country has been hit with a lawsuit accusing it of using misleading sales tactics and overbilling for its services.
The proposed class action, filed on Friday in Brooklyn federal court, said Wells Fargo Merchant Services promised merchants that it would give them transparent pricing but charged them unauthorized fees and disguised the fees with deceptive language in monthly statements.
Wells Fargo Merchant Services, a joint venture between Wells Fargo Bank and payment processor First Data Corp, helps process credit and debit card purchases for businesses.
"We deny the claims and plan to defend against the misrepresentations outlined in the lawsuit," Wells Fargo spokeswoman Sara Hassell said. Pricing terms are fair, and the accusations "do not reflect how we operate our Merchant Services business," she said.
First Data spokesman Mark Murphy declined to comment.
The lawsuit was filed on behalf of tour operator Queen City Tours in Charlotte, North Carolina, defunct Pennsylvania restaurant Patti's Pitas, and other merchants across the country who say they were charged unauthorized fees by Wells Fargo Merchant Services. Hundreds of thousands of merchants were likely affected, the lawsuit said.
"Promises were made by aggressive sales tactics and then broken," said Adam Webb, a lawyer for the merchants. The conduct goes back about six years, he added.
Wells Fargo has been grappling with a nationwide scandal over unauthorized accounts opened by employees in its consumer banking division and numerous lawsuits over its sales practices.
The third-largest U.S. bank last year agreed to pay a $185 million fine to the U.S. government to settle claims about the unauthorized accounts. On Friday, it said it would pay the government $108 million to settle allegations that it charged military veterans hidden fees to refinance mortgages.
The lawsuit regarding cards said Wells Fargo Merchant Services hit merchants with unanticipated or unauthorized fees, such as a $35 monthly minimum charge, after they signed three-year contracts that could be terminated only by paying a $500 penalty.
Wells Fargo buried some terms in a 63-page, fine-print guide that could never be completely read or understood by a busy merchant, the lawsuit said.
Statements sent to merchants described some fees as "interchange charges," indicating they were imposed by a credit card network, when in reality Wells Fargo Merchant Services kept part of those fees as profit, the lawsuit said.
The case is Patti's Pitas et al v Wells Fargo Merchant Services, U.S. District Court, Eastern District of New York, No 17-cv-4583. (Reporting by Dena Aubin; editing by Frances Kerry and Dan Grebler)