A San Diego small business owner is part of a class-action lawsuit against JPMorgan Chase alleging the banking giant "misled and deceived their clients" after funding large companies with money intended for small businesses through the federal government Paycheck Protection Program (PPP).
The lawsuit, which seeks a jury trial and unspecified damages, was filed in San Diego Federal Court on Wednesday.
“It is not about the money, this is about people being recognized as a small business. I think what Chase and some of these other big banks did was wrong,” said Rebecca Hyde-Edwards, who owns the Hyde Edwards Salon & Spa.
Hyde-Edwards has owned her full-service salon and spa in Little Italy since 2007. Due to county orders related to the coronavirus pandemic, she was forced to temporarily close her business on March 17. She had to lay off 23 employees.
“The whole thing’s really sad. And it has been emotional, I’m not going to lie, definitely. It gets you, for sure,” said Hyde-Edwards.
Hyde-Edwards says she applied for a federal PPP loan through Chase, only to be informed money for the program had run out. She says she was disappointed to learn millions of dollars was loaned to large companies.
“Some of these companies got these massive loans that could have been spread out a lot more for the small businesses because we take less, we don’t need $20 million dollars, we don’t need $10 million dollars,” said Hyde Edwards.
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The lawsuit accuses Chase of “unlawful acts and/or intentional practices of making false, misleading, and deceptive representations and omissions concerning their processing of economic assistance via the Federal Paycheck Protection Program.”
The lawsuit says the defendant intentionally ignored the equitable and critical guideline that loans would be processed on a first-come-first-served basis.
“Defendants prioritized the processing of larger loans over smaller loans and loans for which Defendants risked greater exposer in the event of a business failure,” says the lawsuit.
The claim points out Chase prioritized processing loans for large restaurant chains such as Ruth’s Chris Steakhouse (approved $20 million on April 7th), Shake Shack ($10 million), Potbelly Sandwich Shop (approved $10 million on April 6), and Texas Taco Cabana (approved $10 million on April 8).
Shake Shack and Ruth’s Chris Steakhouse have announced plans to return the loan money.
“This isn’t about blame, this is about accountability and about doing the right thing. Just do the right thing, it’s easy, said Hyde-Edwards.
In a potential twist, Hyde-Edwards could still receive loan money through Chase now that congress has approved a second round of funding for small business owners. She concedes it may be awkward, but offers no apologies for being a part of the legal claim.
“I’ve been with them, I’ve been a loyal customer, and guess what, you haven’t been loyal to me, so you know what? I don’t feel bad,” said Hyde-Edwards.
NBC 7 reached out to Chase for comment. They sent the following:
We won’t be able to comment on the complaint itself, but here are some additional points:
We have secured more funding so far for small businesses than any other lender — helping ensure paychecks for more than 1.1 million hard-working Americans.
We worked as quickly as possible in a race against time, volume, and manual processes.
The vast majority of the PPP loans Chase secured went to our smaller business clients.
- About half of our PPP loans have been for less than $100,000
- More than 60% went to clients with less than 25 employees.
- 80% of our PPP loans have been for businesses with less than $5M in revenue
We are ready to go today with tens of thousands of applications when the system reopens, and we hope as many of these will be processed as possible.
